The Charles Schwab Company (SCHW) produced slightly better earnings than expected on April 17, although revenue fell short. This has led to unusual put option activity in an out-of-the-money strike price for expiration in June. That could also provide an income play for investors, assuming no recession hits the U.S. economy.
I have discussed options activity in SCHW stock in several prior articles, including this one on April 14, “Investors Are Piling Into Schwab Puts, Shorting Them for Income.” I discussed shorting the $40 strike price puts for expiration on May 19, given that the stock was at $51. The premium of 43 cents provided a 1% premium-to-strike yield or 12% on an annualized basis.
