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Trade of the Day: Yahoo! Inc. (NASDAQ:YHOO)

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Overall the market has been giving off several bullish signs, as I noted last week, and at times like this I like to take advantage of day-to-day volatility to write puts.

By writing (“selling to open”) a naked put, you’re taking a bullish position on the underlying stock, for those who may not be familiar with this strategy. As the shares continue to trade above your strike price, the value of the puts gradually waste away to zero, and you ultimately walk away with 100% of the put premium you collect upfront.

Here’s my naked put recommendation for Yahoo! Inc. (NASDAQ:YHOO), which recently attracted some bullish attention after announcing a stock buyback ahead of the Verizon Communications Inc. (NYSE:VZ) buyout.

Sell to open the YHOO June 23rd $47 put at about $0.35.

Note: There are several June expirations available for YHOO options. Be sure you are opening the weekly options that expire on Friday, June 23, 2017.

YHOO shares are currently at around $50.50-$51. If you are holding the option at expiration and the stock is trading below the $47 strike price, you will be put the shares. So, if you do not want to take possession of shares, be sure to exit the trade accordingly.

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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.

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