Sep. 13 at 4:40 PM
$ROOT
The fact remains that they planned the buyback in a quarter where share price was in the low to mid
$50 range. Buybacks are done when company feels that share prices are undervalued and that is the best way to return money to shareholders.
The fact remains that 22% OOTM premiums are 10% quarterly ROI, 15% OOTM has 15% quarterly ROI. Put this against a background of stock buybacks and even if it trades neutral and at today’s lower IV levels, you can still get 40% annualized returns for flat stock price. If IV levels go back to higher levels like they had been for a while, add on another 15-20% per year. A fairly safe 50% yearly return is unheard of.
I bought in at
$42 and sold
$65 covered calls after the rebound to
$50. I netted
$12 for 9 months. Cost basis is now
$30 for me. If I renew for another
$10 in January->July, my cost basis will be ~20-25.
