Michael Shulman, Expert Trader, Analyst and Educator

Michael Shulman, Expert Trader, Analyst and Educator

Before we begin, heed this important rule…

You should sell a put only when you’re willing to own the shares at the strike price of the put minus the premium you collect for selling that put.

OK, lesson adjourned. Now, what looks good to sell this week?

Bank of America (BAC).

The stock is hovering just above $14. I think it’s worth $22, so owning at $14 less the premium is not exactly high risk or a hardship.

The bank is the largest retail bank in the U.S., owns Merrill Lynch, and has far more upside than downside. Not just from more business, but also the possibility that the Federal Reserve will give it the go-ahead to raise its dividend, and the possibility that, in the next 2-3 years, it will sell Merrill.

One note: Depending on your commission structure, you may need to sell multiple contracts to make this trade work. Do the math before you click on an order.

Think about it…

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