Trade of the Day: Viacom, Inc. (NASDAQ:VIAB)

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Viacom, Inc. (NASDAQ:VIAB) is really the only good bargain in the media sector. It is very underpriced, and I think that eventually it’s going to be either taken over, or they’re going to do something to change that situation.

VIAB has been very poorly managed, but eventually these things correct themselves. Viacom owns Paramount, which has a huge library of movies and things of that sort, and it also has Nickelodeon. People are going to try to line up to buy that, as it has some important assets. So, I’m bullish on VIAB at this point, and I’m always trying to get trades at extreme levels, so I figure this is a good opportunity to write a naked put:

Sell to open the VIAB Oct. 21st $32 put at about $0.40.

For those who aren’t familiar with this strategy, the basic premise for a naked put write is to sell (also called “writing”) put options and thereby get income upfront in the form of the option premium.

By selling a naked put, you’re betting against the buyer of that put option, who thinks that the underlying stock is going down. If the buyer is wrong and the stock goes up, the put will expire worthless — so, as long as VIAB remains above $32 through expiration, you (as the seller) would have no other obligation and would simply walk away with 100% of the option premium you collect today.

Ken Trester is editor of the popular Maximum Options program. Trester has been trading options since the first exchanges opened in 1973 with a winning streak that goes back to 1984 with money-doubling average annual profits since 1990.


Article printed from InvestorPlace Media, https://investorplace.com/2016/09/trade-day-viacom-inc-nasdaq-viab/.

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