Yum Stock this year has been a star performer. Recently on seekingalpha I commented on an article where the author discussed shorting YUM Stock. I felt this was a bad move and I felt that anyone who though shorting YUM Stock was a good idea, consider buy put options instead. I feel that an easier and far more profitable trade is Put Selling the dips in YUM Stock. This method of Put Selling by chart watching is also far less risky to my capital. The time to short YUM Stock was when it was above $70.00, not when it is trading around $62.50 to $65.00. Personally I don’t believe buying put options or shorting against YUM Stock is the proper answer. Investors tend to forget risk when all they believe they see is profit potential. Yum Stock at present is a lot stronger than those who look for shorting opportunities realize. Put Selling in my opinion is less risky and brings in returns monthly compounding my returns, instead of placing my capital at risk waiting for YUM Stock to collapse.
Study YUM Stock Price Charts
Instead by taking time to study the YUM Stock price charts, investors could earn just as much with far less risk by simply Put Selling against the dips in YUM Stock. Below is the YUM Stock chart for the past 3 months. I have marked the dips in YUM Stock which were excellent Put Selling opportunities. Each red circle marks the Put Selling dips available. If an investor wanted to short the stock the time to do it was back in May.
Put Selling YUM Stock on the dips in the stock has been highly profitable and easy
YUM Stock has followed the overall market direction of higher highs and higher lows, since it sold off. For the more adventurous the $65 put strike has certainly been very profitable for Put Selling as the stock has stayed within the $63.50 to $65.50 range for weeks keeping put premiums elevated, particularly at the $65 strike.
For the less risk oriented the $62.50 strike is certainly compelling with less risk of assignment and certainly very good premiums.
Finally for those who are more conservative, the $60.00 put strike is still quite profitable when sold on strong pushes lower by YUM Stock. Throughout this downturn in YUM Stock, it has failed to reached $60.00, but the volatility is high enough in YUM Stock that it pushes up the premiums on any major down turn such as yesterday.
By following the chart of YUM Stock I can see that as the stock continues to climb higher I can decide which put strike to consider for Put Selling on each pull back. If you look at my YUM Stock trades for 2012 to date you can see that I have throughout this downturn sold a variety of put strikes including as low as $57.50. Presently I am holding 18AUG12 $60 and $62.50 naked put strikes.
Put Selling The YUM Stock August $62.50
Yesterday in the downturn I was busy put selling the YUM Stock $62.50 put strike for .65 cents as the stock sold off early in the day before rallying back up. The range for Put Selling the $62.50 strike was reasonably varied but getting 1% for three weeks is good enough for my Put Selling portfolio of stocks.
Put Selling YUM Stock is all about setting your sights on the dips. Yesterday the $62.50 YUM Stock put strike ranged from .65 to .48 cents.
Put Selling Yum Stock Summary
When you look at the above YUM Stock chart you can see that it is following the S&P 500 trend. With that trend intact, Put Selling Yum Stock has been easy and very profitable. Earnings this year alone are double the past three years combined. It is the higher volatility in YUM Stock that has produced so many Put Selling opportunities. While shorting the stock may make sense for some investors, or even buying puts, I see no reason to even consider anything other than Put Selling the dips and once in a while when the dip gets a bit too deep, buying YUM Stock for a bounce back up.
Setting up charts on your favorite stocks and watching for Put Selling opportunities on dips has been highly successful throughout this stock market correction. I see not reason for changing my Put Selling strategy on YUM Stock until that pattern ends.