slickvguy

Selling Bank of America Puts Is As Safe As It Gets

Ridiculous.
In addition to what the other commenters said, there is no guarantee that BAC will continue to pay the same rate of dividend - let alone increase it by 10% annually.

If you don't think the stock is going down, you'd be better off buying it and collecting the dividend rather than a measly $1.30. Selling puts that are far away calendar-wise is a bad idea. If anything, sell nearer-term puts that are closer to being int he money. THAT at least makes sense. its' very dangerous to sell options that are so far away, because you never know how the company's situation will change by January, eg.

But...if you want to buy BAC for the LONG TERM, and you think it's a good VALUE to buy at $45 or lower, then one strategy is to sell the near-term 45's and collect the premium. If it stays above $45 you'll keep the premium - if not, you'll get the stock at $45, and your cost will be the $45 less the collected premium.

Bottom line: you're being too cute for a very small amount of money. There's no free lunch.