Investors in Charles Schwab Corp (SCHW) stock have found that it is still cheap, as we discussed in recent articles. As a result, shorting its out-of-the-money puts has now become a very popular income play.
For example, we argued in our recent article, “Schwab Puts Show Unusual Put Activity,” on April 26 that SCHW stock was deeply undervalued. We showed that it could be worth significantly more since its average price-to-earnings (P/E) multiple was well below its historical average. In addition, the stock's dividend yield was well over its 5-year average.
