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February 1, 2005
GICS 30: A PG Trade Tuesday, February 1, 2005 14:13:26
On Friday morning, I wrote that I hated Procter & Gamble (NYSE: PG) at its Thursday close of $55.25 " because of its announced deal to pay $57 billion for Gillette (NYSE: G).
What a difference two and a half days makes. PG is down to $52.78, down 45 cents on a strong day for the Dow 30, and could be ripe for a quick trade. Why not buy an April PG 55 call for 55 cents (it's 55-60 right now, so you may have to wait)?
You could also write a July 50 put for $0.90 premium. I don't think it's likely that PG will trade below 50 within 5 months, but if it does, I wouldn't mind paying $49.10, which would take me back to January 2004 market prices on PG, and enable me to beat every pro who accumulated PG in the past year.
Now that's smart trading.
I still hate what PG did re G, but the market's not about me.
Posted by Posted by Bill Cara on February 1, 2005 02:14:14 PM | Category: 30 Consumer Staples , U.S. Dow 30
$0.90 premium on a July 50 put is 1.7% yield over 6 months. Is that the best use of one's money given unlimited risk to the downside? If asked to take that trade, I still don't like PG!!
Posted by: RlzGain![[TypeKey Profile Page]](http://www.billcara.com/nav-commenters.gif)
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February 2, 2005 11:45 AM [link]