In my first report I mentioned United Parcel Service (NYSE: UPS) which paid me $1.35 for an April $40 strike price. It closed today at $51.28. This option will expire on April 17. If that likely scenario pans out then my internal rate of return (IRR) will exceed 20% for a stock that I would be happy to be able to get at $40 anyway. I would be buying it all day long at that price in the open market. Naked puts allow me to get paid to buy things I want to own anyway.

My favorite trade lately is something that the 'shorts' have had their way with for almost two years. That would be MBIA Inc. (NYSE: MBI), down from a 52 week high of $19.08 last September. The company has been punished severely for participating in the sub-prime and CDO marketplace. However, the naked puts I have done will only be a problem if the company actually goes out of business. We have seen it happen, but I think this one will not, because it is being supported by infusions of private equity and they have also cut the dividend.

The open options I am pledged to are at $2.50 and $3.00 strikes, with the next expiration date being May 16 for the lower strike price which paid $0.19 per share. Looking at this from a value proposition, my break even is $2.31 per share. I received a 7.6% premium over 2 months which equates to an IRR of 45.6%.

That for a stock which I already own at $4.40 per share. The idea of making that high a return on a stock I want to own anyway is just too amazing to pass up.

This level of options trading requires certain experience and capital. If you would like to take a look at this opportunity you should definitely seek investment counsel and start slow. It has allowed me to have a profitable first quarter in a down market.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I own shares of MBI and UPS.