Market Shadows Added a New Expiriation Date Put on MJN

By Paul Price of Market Shadows

We currently are short a November $70 put on infant formula maker MJN. (See virtual put selling portfolio.) Because it is likely to expire worthless on Nov 15, 2013, we sold one new contract of the January 2015 series at a higher $80 strike price this morning. We received $9.60 per share for our commitment to buy 100 shares, if the put gets exercised.

Our maximum profit equals the $960 we received on the sale of the put contract. We will keep the $960 if MJN closes above $80 upon expiration in January of 2015.

In the worst-case scenario, we would be forced to buy 100 MJN shares at a net cost of $80 (the strike price) minus $9.60 (premium per share) = $70.40. I think that's a good price.

This new position has been added to our Virtual Put Selling Portfolio.