Trade Idea: Nov 2009

I am looking to sell a Nov 1300 put for $3 or higher. The return / yield on the required 13k margin for 49 days will be 2.31%/17.20% while ThinkorSwim is showing a 3.87% chance of expiring itm. The strike is roughly 25% otm and there are multiple levels of support underneath the index around about 1600 / 1500 / 1400. I am looking to place this trade to avoid the issue I have been having for the past few months - volatility dropping and premiums on options with 30 - 40 days until expiry selling for a somewhat small premium, producing a return of only about 1%. Of course, selling the strike with 49 days in its life enhances the risk that some event may drive down the index and increase the cost to close the position, but I feel comfortable that we are not approaching another black swan event - at most a normal pullback of 7 - 10% or so.

It seems like the market is entering a period of rising volatility and consolidation or possible decline. I believe we may be at the point where the economic news begins to falter, pointing out the fact that the economy isn't as robust as many believe. We also have jobless claims tomorrow and the unemployment rate coming out Friday am - will the market take it as a positive that "only" 170k (the consensus number) people have become unemployed in the last month? Too bad most of them wont be able to find a job.