MMM

3M (MMM) reported earnings today and is down about 3% to 87.32. The stock has had a 52 week range of 68.96-90.52.

MMM reported increases in sales across all its divisions, but gross margins declined which has some investors worried. MMM sports a dividend of yield of 2.40%. The 1 yr target estimate is 100.56.

Buy 100 MMM:            (-8,747)
Sell 1 Jan 12 85 Put:       700
Sell 1 Jan 12 85 call:       860
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total cash outlay: $7,187

Potential profit: $1,553 (700+613+240 dividend) or 22% on a stock that does not need to go up at all until Jan 12.

Break-even: 78.44

You can also just sell a Jan 12 85 put for 700 which would lower your breakeven to $78 which would be your cost basis if the stock was put to you on Jan 2012.