The final selection is Amgen (AMGN). The biotech firm has beefed up earnings growth a bit, now slated to grow at 12%-15%, has $22.5 billion in cash, and solid free cash flow in the $5 billion range annually.
It’s a perfectly safe company, even if the stock is a bit overvalued for my taste. Still, AMGN stock has always sold at a premium to its price/earnings-to-growth ratio, and the 2.1% dividend is a reason why its price remains a bit lofty compared to what I’d like.
When selling naked puts, I like to choose world-class companies like this that have been around a long time. Even if shares get put to me and the stock declines, I know that sooner or later, I’ll make that loss back.
In this case, Amgen is one of the stocks with weekly expiration dates, so by selling the Jan 112 Put (Jan. 30) for $1.70 (for a contract total of $170), I hit my exact target total of $1,000 in income.
As of this writing, Lawrence Meyers held options in all of the aforementioned securities. He is president of PDL Broker, Inc., which brokers financing, strategic investments and distressed asset purchases between private equity firms and businesses. He also has written two books and blogs about public policy, journalistic integrity, popular culture, and world affairs. Contact him at firstname.lastname@example.org and follow his tweets @ichabodscranium.