I’m reporting an options trade from this week for TEVA. I’ve already bought and closed one previous TEVA put for a profit of $203.
TEVA’s CEO resigned yesterday and this is why the stock is down big. I decided to take advantage of this and sell a put. I may also add to my position next Tuesday if the stock stays depressed.
What I like about TEVA:
1.) They are the largest generic drug manufacturer in the world and this business isn’t going anywhere.
2.) They have increased their dividend every year for 13 straight years right through the Great Recession.
3.) They have announced a 2-billion dollar cost savings program by 2017
4.) They have a 5-Year CAGR of 21.8% (Although most recent raise was 15% it’s still respectible)
5.) At current prices TEVA is yielding 3.25%
What I don’t like:
1.) They are losing patent protection on their blockbuster drug, Copaxone.
2.) Their CEO resigned and it’s unsure who will be running the company
3.) They slightly narrowed their outlook for 2013
4.) The stock has been depressed the last 5 years, with a high of over $60 to current prices
5.) TEVA is based in Israel and there is a 15% withholding tax on dividends
I Sold 1 TEVA June 21 ’14 $37.5 Put @ 3.00
This trade could turn out a few ways:
1) I hold shares until expiration and shares are trading above $37.50. I will get to keep the $300 in options premiums.
2) I hold shares until expiration and shares are trading below $37.50. I will get assigned 100 shares of TEVA at a cost of $34.50/share. This is a discount of almost 7% from where the stock is currently trading and a 10% discount to my cost basis of $38.26.
3) Shares of TEVA go on a run and I decide to buy back the put early for a profit less than $300.
I currently have 9 open options positions and a total options profit of $4149 for 2013. My options page has been updated accordingly.