Trade Entered: KO Coca Cola

Today I sold several KO May 35 puts for .55 ($55) each in a large taxable, margin account. The margin maintenance requirement this far out of the money is $410 per contract. Return on margin (ROM) is 13.41% (55/410) for 79 days or 61.96% annual. At the time of the trade KO was trading at $42.50 and the Dow was at 7400. We have downside protection to $34.45 and there is strong technical support for KO at $40.

Coca Cola just had a nice quarterly report and raised their dividend to 3.87%. If put to us the dividend would be 4.7%.

In this account there is a ton of margin going unused. I've been looking for some safe bets to collect premium and have time decay go to work for us. I didn't enter this trade when the market was panicking like I normally do and this may be a mistake but the market is sufficiently beaten down that we're not trading at the top of the cycle. In addition, KO didn't trade much lower than this during times of panic.