Rolled Forward and Down 1 Put option on MPW – 4.53% potential income return in 85 days (19.43% annualized)

On August 11, 2023, I rolled forward and down 1 put option on Medical Properties Trust Inc stock (NYSE:MPW), a position I originally established on at the start of July 2023

I rolled because my strike price of $8 was in the money and the expiry date (August 18) was approaching. I didn’t want to take an assignment risk before the expiry and decided to roll down this position, while still squeezing out some extra juice (premium)

From the premium received, I bought an additional 2 shares of MPW stock itself for our long-term stock portfolio. MPW also is a dividend payer, this little addition will boost the portfolio by $1.96 yearly. Amazing!

MPW reported bad guidance and a possible dividend trim is very likely to happen.

We are now holding 4 shares with MPW in our stock portfolio, 96 to go before will start selling covered calls to generate extra income.

This is not trading advice. Investments in stocks, funds, bonds, or cryptos are risk investments and you could lose some or all of your money. Do your due diligence before investing in any kind of asset.

Medical Properties Trust, Inc., based in Birmingham, Alabama, is a real estate investment trust that invests in healthcare facilities subject to NNN leases. The company owns 438 properties in the United States, Australia, Colombia, Germany, Italy, Portugal, Spain, Switzerland, Finland, and the United Kingdom.

here is the trade setup:

• BOT 1 MPW Aug 18'23 8 PUT 0.57

• SLD 1 MPW Sep 29'23 7.5 PUT 0.69

What happens next?

On the expiry date, September 29, 2023, MPW is trading above $7.5 per share -  options expire worthlessly and I keep premium - if MPW trades under $7.5 on the expiry date, I risk getting assigned 100 shares and will have to buy them paying $750

As I already have collected a premium of $0.34 per share, my break-even price for this trade is $7.5-$0.34= $7.16

In case of an assignment, I will turn this trade into a wheel strategy and will start selling covered calls.

Anyhow, if troubled with the strike price near the expiry, I will try to roll it forward and down, preferably for credit, before actually taking the stock assignment.

• In total: 5 trades since July 6, 2023

• Options premium: $34