The wait is over.

Several weeks ago I mention two industry leaders were facing rough patches with share prices falling down the elevator shaft. The stock drops sent shares to the most oversold technical levels in a decade. When great businesses hit a rough patch savvy investors can pick up fantastic assets for pennies on the dollar. However trying to catch a falling knife is never fun and often very painful.

Great business No. 1 was semiconductor giant Intel (INTC). Intel hit a buy signal last week. Today we have a buy signal in great business No. 2 3M (MMM). For a refresher on why 3M is a great business see: https://busy.org/@slider2990/watch-list-for-put-selling-opportunity.

3M's RSI has risen from rock bottom to over 39 (a break above 30 is a bullish signal).

Shares are due to at least a short term continuation rally.

Trade details (insured put strategy):

Sell to open the July 19, $165 puts for $3.50 and buy to open the July 19, $155 puts for $1.06 for a net $2.44 credit. This earns 1.5% on your $165 purchase obligation for a 6 week holding period or 13.8% annualized.

Three trade outcomes:

At expiration if shares are below $155: both puts will be exercised. Your broker will simultaneously buy 3M for you at $165 a share and sell it for you at $155 for a $10 loss per share. You received $2.44 upfront so net loss of $7.56 or 4.6%.

At expiration if shares are between $155 and $165: The $155 put will expiration worthless and you will buy shares at $165 for a cost basis of $162.56. You will own shares at a great price and have the potential to earn more income by selling covered calls. (if this happens establish a stop loss at $155 for your protection)

At expiration if shares are above $165: you keep all the cash and move on to the next trade.

A great benefit of this type of trade is that your stop loss is built in for the duration of the puts.

Cheers to your health and wealth.

Disclosure: I wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in this article. The information provided should NOT be considered advice. The topics discussed are risky and have the potential to lose a substantial amount. I am not an investment professional and therefore do not offer individual financial advice. Please do your own research before investing.