Put Selling combined with buying and selling YUM Stock on weakness has brought huge returns this year. No other year in YUM Stock can compare to 2012 and I am only into July. With the returns for July in YUM Stock already up to $15623.00 or roughly 27%, this year’s returns shine in relation to past years of Put Selling.
Past Put Selling Earnings In YUM Stock
Past Put Selling earnings in YUM Stock pale in comparison to 2012.
In 2009 I earned $1397.25 over 6 months through Put Selling. This represented a 4.6% return on capital.
In 2010 I earned $5964.00 over 12 months through Put Selling YUM Stock for a return of 13.25%.
In 2011 I earned $6863.50 over 12 months through Put Selling YUM Stock for a return of 12.47%
While all three past years have been decent, 2012 stands out as one of the best Put Selling periods for YUM Stock. For investors interested you can select this YUM Stock link to view YUM Brands investors relations.
2012 Put Selling In YUM Stock Is All About Volatility
The trading in YUM Stock this year shows the incredible volatility in the stock since May. It also shows the importance of confidence in picking support levels for Put Selling while avoiding assignment of YUM Stock shares.
It is these same support levels that have allowed me to pick weak periods in YUM Stock for buying and then quickly selling the shares.
To understand this you need to know about Support and Resistance in YUM Stock. My Put Selling success is dependent on knowing the Support and Resistance Levels, plotting them out and then refusing to do any Put Selling at valuations that are too high. In the chart below for the past 1 year on YUM Stock you can see by studying volumes that there is a lot of buyers and sellers at the $50 to $55 levels in the stock. There is a lot weaker support at $62.50 and $65 levels in the stock and volumes at those levels show a much smaller interest in YUM Stock by investors.
This tells me that the $57.50 and $55.00 strikes are good for Put Selling. If YUM Stock fell below $57.50 I know from the past 12 months I should see good support around $55.00 which will allow me to sell covered calls profitably if assigned shares of YUM Stock due to my Put Selling getting me assigned if the stock falls.
Put Selling Yum Stock successfully and staying away from higher valuations can be determined by looking at volumes to assist in plotting key support strength levels.
Looking at the above Support and Resistance chart on YUM Stock there probably isn’t too much trouble doing Put Selling at even the $60.00 strike but I would prefer to be put selling the $60 or even the $62.50 strike once YUM Stock turns back up and begins to rally once more. You can understand from my chart above that I believe strongly in the importance of strategy and having a plan. Both are key to long-term success in Put Selling as well as trading not just YUM Stock but any stock.
To understand more about plotting support and resistance levels in stocks consider reading this two part article. You may also want to consider these articles on options strategies for income as they touch on the importance of plotting support and resistance.
Why The Volatility In Yum Stock
YUM Stock is more volatile lately as investors are concerned about the upcoming earnings based on their belief that earnings will not meet expectations due to Asia and China experiencing slow downs in their economies. YUM Brands is very dominant in that region of the world. This worry has made YUM Stock very volatile which is pushing the stock up and down and increasing put option premiums making Put Selling very profitable.
I have written a number of YUM Stock articles discussing YUM Stock support levels and where I believe Put Selling is the most advantageous for both profitability and protection from being assigned at too high a valuation. While the stock is having trouble around the $62.50 to $65.00 level, there actually is not a lot of support for Yum Stock at this level. It is quite a bit lower with good support down around the $57.50 level. Having confidence in my charting is paramount to my success, both in put selling and buying and selling YUM Stock shares.
Put Selling Profits in YUM Stock
With investors nervous about earnings, YUM Stock is offering excellent Put Selling opportunities along with some terrific buy and sell trades as investors keep pushing down the stock and I keep buying it for another run back up. A lot of institutional investors are in YUM Stock and daily weakness is being bought. This may not hold but overall I like YUM Stock at this level and will continue Put Selling unless YUM Stock should move back up above $68.00.
Put Selling The $57.50 Strike
Put Selling at the $57.50 strike has become my most favorite strike for the month of July. I am not holding naked puts beyond July at this time as I believe there will be lots of opportunity ahead, at least until the fall. Should the stock pull back below $61.00 this summer, it should push up both the $57.50 and $55.00 put strikes making them very tempting for Put Selling.
The great thing about all this volatility is that it has pushed YUM Stock back to what I consider more realistic valuations. When YUM Stock was above $68.00 I had stopped Put Selling. That was on March 16 2012 in which I wrote on my website that I was holding off Put Selling as YUM Stock was overvalued and I did not want to be assigned shares of YUM Stock above $68.00
Patience Is Key To Put Selling
Investors love trading options. They love the action and watching their capital grow. But over trading is a constant problem for many investors and when it comes to Put Selling it is a common occurrence. There is no need to be 100 percent invested all the time. My YUM Stock trades are a perfect example. From the beginning of the year until mid-March when I stopped Put Selling as YUM Stock was overvalued, I earned $5451.50, but since the stock pulled back I have earned $10171.50 or almost double my original earnings.
There is never a need to engage in Put Selling at overvalued stock prices on stocks. There must be a level of support as a stock rises in order to warrant risking capital at too high a valuation. As a stock rises, if it builds support, then continuing Put Selling is warranted. A good example would be Walmart Stock presently. There is enough support in Walmart Stock to warrant risking capital through Put Selling as the stock continues to build support levels in its rise.
Yum Stock on the other hand has not built a lot of support above $65.00 or even $62.50 and until there is better support, it is wise to be careful Put Selling YUM Stock at these valuations. As well with put strike premiums at $57.50 being quite good, there is no real need to be Put Selling at or above $62.50 unless you are interested in owning stock at such a valuation.
Put Selling Yum Stock Summary
Put Selling YUM Stock has been highly profitable so far this year. YUM Stock has gone a long way to building my US Portfolio which is now already over 12% for the year and continuing to grow. Put Selling YUM Stock this year has been all about confidence in my selection of support levels in the stock and refusing to engage in Put Selling at strikes that would risk my being assigned YUM Stock at overvalued prices.
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