MNV
Market News Video
MNV MNV The 10 Most Popular Large-Caps in ETFs
MNV
MNV
MNV
MNV
MNV
MNV
MNV
Free Dividend Report - Top Ranked Stocks

Featured MNV Articles:

Ex-Dividend Reminder: Tootsie Roll Industries, J&J Snack Foods and Royal Caribbean Cruises
Tuesday, December 17, 10:32 AM ET, by Market News Video Staff

On 12/19/19, Tootsie Roll Industries Inc (TR), J&J Snack Foods Corp. (JJSF), and Royal Caribbean ...

Ex-Dividend Reminder: Corteva, Kellogg and Tootsie Roll Industries
Thursday, February 27, 9:56 AM ET, by Market News Video Staff

On 3/2/20, Corteva Inc (CTVA), Kellogg Co (K), and Tootsie Roll Industries Inc (TR) will ...

TR Crosses Above Key Moving Average Level
Tuesday, March 17, 11:08 AM ET, by Market News Video Staff

In trading on Tuesday, shares of Tootsie Roll Industries Inc (TR) crossed above their 200 ...

Tootsie Roll Industries (TR) Shares Cross Below 200 DMA
Thursday, May 14, 11:07 AM ET, by Market News Video Staff

In trading on Thursday, shares of Tootsie Roll Industries Inc (TR) crossed below their 200 ...

Ex-Dividend Reminder: Coca-Cola, Leggett & Platt and Tootsie Roll Industries
Wednesday, June 10, 10:07 AM ET, by Market News Video Staff

On 6/12/20, Coca-Cola Co (KO), Leggett & Platt, Inc. (LEG), and Tootsie Roll Industries Inc ...

Commit To Purchase Tootsie Roll Industries At $30, Earn 8.7% Annualized Using Options

By Market News Video Staff, Friday, February 8, 11:58 AM ET
Play Video: How To Sell A PUT


If the video does not load after a few moments, Upgrade to the Latest Flash Player.

Investors considering a purchase of Tootsie Roll Industries Inc (NYSE:TR) stock, but tentative about paying the going market price of $35.65/share, might benefit from considering selling puts among the alternative strategies at their disposal. One interesting put contract in particular, is the February put at the $30 strike, which has a bid at the time of this writing of 5 cents. Collecting that bid as the premium represents a 0.2% return against the $30 commitment, or a 8.7% annualized rate of return (at Stock Options Channel we call this the YieldBoost).

Selling a put does not give an investor access to TR's upside potential the way owning shares would, because the put seller only ends up owning shares in the scenario where the contract is exercised. And the person on the other side of the contract would only benefit from exercising at the $30 strike if doing so produced a better outcome than selling at the going market price. (Do options carry counterparty risk? This and six other common options myths debunked). So unless Tootsie Roll Industries Inc sees its shares decline 15.5% and the contract is exercised (resulting in a cost basis of $29.95 per share before broker commissions, subtracting the 5 cents from $30), the only upside to the put seller is from collecting that premium for the 8.7% annualized rate of return.

Interestingly, that annualized 8.7% figure actually exceeds the 1% annualized dividend paid by Tootsie Roll Industries Inc by 7.7%, based on the current share price of $35.65. And yet, if an investor was to buy the stock at the going market price in order to collect the dividend, there is greater downside because the stock would have to fall 15.47% to reach the $30 strike price.

Always important when discussing dividends is the fact that, in general, dividend amounts are not always predictable and tend to follow the ups and downs of profitability at each company. In the case of Tootsie Roll Industries Inc, looking at the dividend history chart for TR below can help in judging whether the most recent dividend is likely to continue, and in turn whether it is a reasonable expectation to expect a 1% annualized dividend yield.

Below is a chart showing the trailing twelve month trading history for Tootsie Roll Industries Inc, and highlighting in green where the $30 strike is located relative to that history:

The chart above, and the stock's historical volatility, can be a helpful guide in combination with fundamental analysis to judge whether selling the February put at the $30 strike for the 8.7% annualized rate of return represents good reward for the risks. We calculate the trailing twelve month volatility for Tootsie Roll Industries Inc (considering the last 251 trading day closing values as well as today's price of $35.65) to be 19%. For other put options contract ideas at the various different available expirations, visit the TR Stock Options page of StockOptionsChannel.com.

In mid-afternoon trading on Friday, the put volume among S&P 500 components was 2.09M contracts, with call volume at 1.89M, for a put:call ratio of 1.11 so far for the day, which is unusually high compared to the long-term median put:call ratio of .65. In other words, there are lots more put buyers out there in options trading so far today than would normally be seen, as compared to call buyers. Find out which 15 call and put options traders are talking about today.


This Article's Word Cloud:   Arial   February   Industries   Options   Roll   Stock   Tootsie   YieldBoost   about   afterLeftLabels   among   annualized   axisColor   background   because   beforeLeftLabels   benefit   bkgImage   bottomBuffer   bottomLabels   bottomTableHeight   buyers   call   chart   considering   contract   dividend   fillColor   from   going   history   market   only   options   other   price   rate   return   selling   share   shares   stock   strike   that   there   today   trading   whether   which   would
MNV
MNV
About Us - Advertise - Contact Us - Embedding Videos - Licensing Videos - Partners - mRSS / RSS Feed - Terms of Use - Privacy Policy
MNV
Home  |  Analyst News  Dividend Report  ETFs  Insider Report  Large Caps  Market Movers  Week Ahead Report  Weekly Market Wrap
MNV
MNV MNV Portfolio Channel Stock Market Definitions
MNV

Commit To Purchase Tootsie Roll Industries At $30, Earn 8.7% Annualized Using Options | Market News Video | Copyright © 2008 - 2020, All Rights Reserved

Any ideas and opinions presented in all Market News Video clips are for informational and educational purposes only, and do not reflect the opinions of BNK Invest, Inc. or any of its affiliates, subsidiaries or partners. In no way should any content contained herein be interpreted to represent trading or investment advice. None of the information contained herein constitutes a recommendation that any particular security, portfolio, transaction, or investment strategy is suitable for any specific person. All viewers agree that under no circumstances will BNK Invest, Inc,. its subsidiaries, partners, officers, employees, affiliates, or agents be held liable for any loss or damage caused by your reliance on information obtained. Read Full Disclaimer.