St. Paddy’s Day Puts to Steal Gold from the Rainbow

March is setting up nicely as a month to sell naked puts against some quality stocks. I�ve written before about this strategy, in which I sell these naked puts and collect the premium for income.

If the puts get exercised, I�m perfectly happy to own the underlying stock because I�ve done my research and think the stock is fairly priced and a long-term hold.

And if they don�t, then I�ve just created my own pot of gold that�s full of short-term option profits!

Trade #1: Dollar Tree

First up is Dollar Tree Stores (NASDAQ:DLTR). I�ve followed this company and stock for many years. And every time I compare it to the other discount-store chains, it always comes out on top.

The dollar stores are undergoing a renaissance of sorts, as they steal market share away from grocers. The stock traded Tuesday at $88.50.

I love selling the DLTR March 87.50 Puts for $2.20 here. This gives me the 2.5% targeted return that I like when I sell naked puts, plus an extra dollar of downside protection.

Trade #2: DirecTV

DirecTV (NASDAQ:DTV) is�another longtime favorite of mine. I just have so little concern about owning a company that literally throws off billions in free cash flow every year, has a fabulous brand and marketing presence and is expanding like wildfire in Latin America.

The stock is trading at $45.85.� I plan to sell the DTV March 45 Puts for $1.�At a 2.22% return, it isn�t exactly on target, but if the stock dips a bit, the premium will rise.

Trade #3: Leucadia

Leucadia National Corp. (NYSE:LUK) is a conglomerate that�s been run by the same guys for 30 years.�Like Warren Buffett, they take big positions in a variety of companies and reap the benefits.�Their holdings are highly diversified, and the stock is never given the credit it�s due.

There isn�t a trade to make today, but keep a careful eye on it.� At $28.63, it�s trapped in the middle of a wide strike price spread between $30 and $25.

If it pops back up to $30, or drops down toward $25, look to sell the corresponding put and aim to collect at least 75 cents on the $30 put strike, or 65 cents on the $25 put strike in March.�No matter which put option you end up selling, know that it�s a great company to own if the shares get �put� to you.

Trade #4: Intel

Intel (NASDAQ:INTC) falls into another category: that of the �Forever Hold� stock that you can repeatedly sell puts or calls against.�I have no hesitation owning Intel, but prefer to sell naked puts month after month until and unless the stock is put to me.

At $26.78, I would actually reach out to April and sell that month�s $26 put for 75 cents — an almost 3% return.�While I�d like to collect more on a popular name, the premiums on steady, solid stocks like INTC tend to be smaller.

So enjoy the extra coins in yer pot o� gold as St. Patrick�s options expiration day approaches!

Lawrence Meyers does not own shares of any company mentioned.�He is President of PDL Capital, Inc., which brokers secure high-yield investments to the general public and private equity.