DGI Adventure 09-09-16 Sold Cash Secured Put – Whole Foods Market, Inc (WFM) – $27.50 strike – Sept 30 Expiration

This trade was actually executed on Wednesday 09/07/16. I didn’t get a chance to write about it until today.

I originally did a full blown investment thesis way back in  October of 2015, when my wife was considering buying shares for her Roth IRA. She ended up pulling the trigger a few weeks later. Of course the share price has bounced around a lot since then, but it hasn’t really gone anywhere. Her entry point was an amazing example of gaff fishing at it’s finest!

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WFM One Year Chart – Courtesy Yahoo! Finance

Wednesday was a rough day for grocery store stocks, because Sprouts Market (SFM) reduced their same store guidance for the rest of the year.

I’m not joking….here’s a retarded article written by an illiterate robot “named” Rachel Aldrich to prove it.

The ticker symbols are kind of similar I guess? IDK.

Anyway, I sold a put. This post is only intended to record the trade.

I have updated the portfolio and income tracker back at the mothership to reflect this position.

Dividend Cycle

The current quarterly payout is $0.135/share and the stock is due to go ex-dividend at the end of September, so it could be right around when this trade expires. We’ll see. The premium is worth nearly double the dividend distribution.

I fully expect WFM to become a dividend challenger when they raise the distribution in the first quarter of next year.

Regardless of what Sprouts’ revised same store guidance may be.

Investment

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SPL (Strike Price Logic)

Just look at that one year chart!

It’s bounced several times around $28.50. So $27 seems miles away from that. I would have liked to get $26, as that would represent a 2% yield at the current distribution, but that strike price lacked attractive premiums. Assuming they raise the dividend again next year, I’m sure a $27 entry point will represent a very attractive invested yield.

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