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Follow-up #4 – A campaign to write put options on POW

Martin Noël
October 31, 2016
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Follow-up #4 – A campaign to write put options on POW

Underlying Asset

Power Corporation of Canada (POW)

Power Corporation of Canada is a diversified international management and holding company. Through its subsidiary, Power Financial Corporation (TSX), it owns interests in companies in the financial services sector in Canada, the United States and Europe. Through its subsidiary Square Victoria Communications Group, it owns interests in companies in the communications and media industry. Furthermore, Power Corporation actively owns and manages a portfolio of investments in the United States, Europe and China. The company manages $500 billion in assets.

 

Position Follow-Up

pow_suivi_4

This week, we return for a fourth time our campaign to write put options on POW.

View previous articles:

July 4, 2016

August 22, 2016

September 26, 2016

October 31, 2016

 

Prior Results

Expiring on August 19, 2016

  • Profit = $550

Expiring on September 16, 2016

  • Profit = $450

Expiring on October 21, 2016

  • Profit = $350

Expiring on December 16, 2016

  • Profit = $510

Total profit: $1,860

 

New Position

POW has been on a bullish trend since it bottomed out at $26.80 in September 2016. The stochastic oscillator is now over 80, indicating strong bullish momentum. As long as it does not break through 60, we should assume that the trend will remain bullish. A price of $29 could represent an attractive buying opportunity. Consequently, we will increase the strike on the put options to $29 for the February 17, 2017 expiration.

 

  • Write 10 put options, POW 170217 P 29, at $0.31
    • $310 credit

If the put options are in-the-money when they expire on February 17, 2017, we will buy the POW shares at a net cost of $26.83, or $29 less the $1.86 profit previously realized and the $0.31 premium of the new position.

If the puts are out-of-the money on expiration, then we will realize a maximum profit of $310, for a potential total profit of $2,170 for the campaign.

 

Further Action

 

No intervention is planned at this time.

 

Good luck with your trading, and have a good week!

 

The strategies presented in this blog are for information and training purposes only, and should not be interpreted as recommendations to buy or sell any security. As always, you should ensure that you are comfortable with the proposed scenarios and ready to assume all the risks before implementing an options strategy.

 

Martin Noël
Martin Noël http://lesoptions.com/

President

Monetis Financial Corporation

Martin Noël earned an MBA in Financial Services from UQÀM in 2003. That same year, he was awarded the Fellow of the Institute of Canadian Bankers and a Silver Medal for his remarkable efforts in the Professional Banking Program. Martin began his career in the derivatives field in 1983 as an options market maker for options, on the floor at the Montréal Exchange and for various brokerage firms. He later worked as an options specialist and then went on to become an independent trader. In 1996, Mr. Noël joined the Montréal Exchange as the options market manager, a role that saw him contributing to the development of the Canadian options market. In 2001, he helped found the Montréal Exchange’s Derivatives Institute, where he acted as an educational advisor. Since 2005, Martin has been an instructor at UQÀM, teaching a graduate course on derivatives. Since May 2009, he has dedicated himself full-time to his position as the president of CORPORATION FINANCIÈRE MONÉTIS, a professional trading and financial communications firm. Martin regularly assists with issues related to options at the Montréal Exchange.

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