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Update UVXY puts

I was finally able to sell my UVXY puts.

music selection:  “In-A-Gadda-Da-Vida” — Iron Butterfly

Back on 9SEP2015, I bought the five strike LEAP puts for UVXY at 1.40 a share.  Volatility spikes sent the position deeply underwater but it finally recovered.  Today, I sold the position for 1.59 a share.  The position was in force for 317 days and yielded 15.63% annualized.  I’ll admit to being “wrong” on the call this time.  But when your ‘bad’ trades yield almost 16% annualized you are doing pretty well.

I replaced the puts with UVXY180119P00004000 and paid 2.05 a share.  I’ll hold the position at least 30 days before selling so I’ll hold through the 1:5 reverse split.  The adjusted strike will be 20.

In other news, some positions expired today.  Puts on QCOM and MSFT expired out of the money.  I’ll reopen puts here on Monday.  Covered calls on LNG and DIS expired out of the money.  I’ll be rolling those positions as well.  A covered call on GSK finally expired in the money.  I’ll say goodbye to the shares and exit the position.

Devour your prey raptors!

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Options trades 18JUL2016

Trying something a little different with post scheduling.

music selection:  “The Sound Of Silence (cover)” — Disturbed

weigh-in:  215.0 (1.0) – down 5 pounds in last 6 weeks; good pace.

I am going to start posting trades as I make them instead of disbursing them out into a regular MWF posting schedule.  Posts will be less frequent but more timely.

I had several positions expire over the weekend and succeeded in rolling four of them.  First was GEL.  I thought this one had run away from me but I was able to get minimum pricing on GEL160819P00037500 which I sold for 80 cents a share.  Annualized return is 23.60% with 8.18% downside protection.

I was also able to get back into my high yield thermal coal plays.  I sold ARLP160819P00015000 for 20 cents a share.  That yields 14.75% annualized which is disappointing compared to last month’s at the money haul but comes with very good 16.99% downside protection.

Also in the high yield thermal coal space, I sold AHGP160819P00020000 fir 30 cents a share.  That yields 16.59% annualized, which is quite respectable.  It comes with 16.59% downside protection.

Apple came within sneezing distance of being called away.  I moved up a strike for this month’s covered call to see if I can capture some short term capital gains.  I sold AAPL160826C00101000 for 1.98 a share.  That yields 18.07% annually against my 100 cost basis.  Yield if shares are called at 101 would be 27.19%, very tasty.  In total, I’ve collected 5.33 a share in premiums against this position across all positions.

I was unable to get a minimum acceptable return today on SDLP, PMT, HCP, or AMLP.  I will be trying again tomorrow but it looks like these have run away from me.

Devour your prey raptors!

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Update Discounted Bonds

Another limit order cleared on a discounted bond today.

music selection:  “Save Our Souls” — Motley Crue

On 5FEB2016, I purchased two units of the Genworth 7.700 coupon 15JUN2020 maturity bonds.  I paid 71.25 cents on the dollar, 4 dollars in commissions plus 23.53 in accrued interest to enter the position.  Today, my limit order for 92 cents cleared the market.  I paid another 9.75 in commissions and received 14.97 in accrued interest.  In addition, during the holding period, I collected 77 dollars worth of coupons.  The trade was in force for 161 days and yields 73.31% annualized.

In other news, I had some options positions go to expiry today.

An AMLP strangle closes out outside of the money.  I will write a new strangle on Monday

An AAPL covered call expires worthless.  I will write a new call on Monday.

A covered call position in GEL has resulted in shares being called away.  I will open a cash secured put on Monday.

AHGP puts expire worthless.  The price has run away from me and I’ll say goodbye to this one for now.

ARLP puts expire worthless.  I’ll open a fresh put here on Monday.

A covered call position in HCP went down to the wire and expired seven cents out of the money.  I’ll write a new call on Monday.

SDLP puts expired safely out of the money.  I’ll roll the position if and only if I can get attractive pricing on Monday.

Devour your prey raptors!

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Update discounted bonds

Two more bonds sold recently.

music selection:  “Because The Night (cover)” — Bruce Springsteen

On 11JAN2016 I purchased two units of Atwood Oceanics 6.500 coupon Feb-20 maturity bonds.  I paid 45 cents on the dollar, two dollars in commissions and 58.86 in accrued interest.  On July 1st, I sold the bond for 75 cents on the dollar.  I paid 2.75 in additional commissions and received 56.33 in accrued interest.  During the holding period, I collected 65 dollars from coupon payments.  The trade was in force for 172 days and yielded 146.32% on an annualized basis.

On July 5th I sold the remaining Transocean bond in my portfolio.  I originally paid 69.35 cents on the dollar on 17DEC2015.  That came with 3.50 in commissions and a payment of 21.48 for accrued interest.  I sold the bond for 92 cents on the dollar, paid 1.75 in commission, and received 9.57 in accrued interest.  During the holding period, I collected a 32.50 coupon.  The trade was in force for 201 days and yielded 61.12% annualized.

Even with a few losers (some real dogs!), discounted bonds have been my best performing asset class.  I expect to have some capital freed up next week after some covered calls exercise.  I’ll be looking to deploy more cash towards discounted bonds if I can find any tasty deals.

Devour your prey raptors!

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Buy PIMCO Dynamic Credit Income Fund (PCI)

I bought PCI on Friday.

music selection:  “Down Boy” — Yeah Yeah Yeahs

weigh-in:  216.0 (3.2)

High yield and fixed income are a critical part of my strategy.  The options part of the strategy can be thought of as “short volatility”.  To balance that out (proper diversification) I need low Beta components of the portfolio.  I also need a steady current income in early retirement and monthly paying debt instruments fit the bill.

PIMCO Dynamic Credit Income Fund (PCI) is a closed end fund invested in a mix of debt instruments.  It has an average credit rating of Investment Grade.  Versus the trailing twelve months of distributions, it yields 11.42% and pays monthly.  I like this one a lot because Bill Gross (the “bond king”) is a major holder of shares and the advisors also own shares for their personal portfolios.  These guys are eating their own cooking.  Importantly, the fund is trading for a little better than 5% discount to NAV.  I am getting a dollar’s worth of assets for only 95 cents.

I bought this with cash from checking into the Wells Fargo brokerage.  So it represents a reduction in cash withdrawn from portfolio.  I’ll update my withdrawal rate at next transparency post accordingly.

Devour your prey raptors!

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Write Put Blackstone Minerals (BSM)

I am playing the run up in oil and natural gas prices with a put on BSM.

music selection:  “Synthetica” — Metric

BSM is the largest of the oil royalties companies.  It yields 7% but a distribution increase is planned that will make the distribution about 7.7%.  My reasoning for playing this goes like this: royalty companies have a distribution that lags the price of the underlying commodity.  Oil and gas have been on a crazy run but it hasn’t started showing up on the BSM bottom line…yet.  It is about due to hit the bottom line.  I’d be glad to own so writing a ‘risky’ put is a no-brainer proposition.

Yesterday, I sold BSM160819P00015000 for 81 cents a share.  The trade will be in force for 44 days and yields a tasty 44.80% annualized.  In addition, I enjoy 8.83% downside protection against a decline in share price.  This one would also be a good long term holding as management is on record with plans to increase distributions for the next three years.

In other news my written put on Eli Lilly (LLY) looks to expire safely out of the money today.  The price has run up out of range and I will not be writing a new put on Monday.

Devour your prey raptors!

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Write Put Seadrill Limited Partners (SDLP)

I wanted to take advantage of Brexit volatility with a big options play so I wrote puts on SDLP.

music selection:  “Start Me Up” — The Rolling Stones

SDLP is pretty beaten up with the downturn in the oil patch.  Despite difficult times, it clings to profitability and continues to produce attractive cash flows.  The underlying yields over 17% as the company continues to pay its distribution from operating cash flow.  This one is a little risky, especially if the price of oil collapses again.  Based on continuing declines in domestic production, I’m calling the long term price for WTI crude between 45 and 50 dollars a barrel.  I think SDLP can hang tough in that range.

On the 28th of last month, I sold SDLP160715P00005000 for 20 cents a share.  The trade will be in force for 18 days and yields an astounding 81.11% annualized.  In addition, the trade enjoys 6.07% downside protection.  I expect to do well here.

Devour your prey raptors!

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Covered call Prospect Capital (PSEC)

I bought shares of Prospect Capital and now I’m going for an options kicker.

music selection: “Love Stinks” — The J. Geils Band

weigh-in: 219.2 +2.0 (ouch, too much holiday bbq)

The underlying shares yield over 12% and is paid monthly.  On the 20th, I sold PSEC160819C00008000 for 5 cents a share.  The trade will be in force for 61 days and yields 3.74% on an annualized basis.  I’m enjoying 0.64% downside protection and have room to pick up as much as 15 cents in capital appreciation before shares are called away.  In that event, my annualized yield would be 14.96%.  I’d prefer to write puts at 7 but this one has shown some price strength lately made that trade less attractive than covered calls at 8.

In other news, the MEGA Millions lottery is at 449 million for the jackpot.  Will you be risking a ticket?

Devour your prey raptors!

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Financial Transparency 30JUN2016

Another good month despite some Brexit volatility.

music selection:  “Tear Away” — Drowning Pool

 

ASSETS:

Wells Fargo (taxable): Gains here were trivial at $467 moving from 24,321 to 24,788.  Municipal bonds continue to perform well and some of the Closed End Funds now sell at a small premium to NAV.  I’ll be a seller at 10% or more premium.

Interactive Brokers (taxable): I did quite well here picking up 16,497 in gains while moving from 205,352 to 221,849, a gain of 8.03%.  My UVXY play was a major driver as the 5 strike puts are far less underwater.

Interactive Brokers (tIRA): Only a small move of 1,120 here from 117,587 to 118,707.  It is in the right direction though.

Checking: Cash on hand is up $989 from 9,947 to 10,936.  I have some items I purchased for the HOA that will come through as expenses next month but there should be offsetting reimbursements.

Total liquid networth: The grand total for the month is 376,280.  That is an increase of 5.34% and a new high water mark.

 

LIABILITIES:

No changes.

House: Paid

Car: Paid

Income tax liability currently met.  Continued short term gains could raise this liability but there should be cash to cover it.

 

WITHDRAWAL RATE:

Projected twelve month withdrawals are unchanged at 27,386.  Against a liquid networth of 376,280 that is a withdrawal rate of 7.28%.  Total distributions for the forward twelve month period sit at 27,159 or 99.17% of withdrawals.  Only a couple hundred dollars in annual options premium are needed to bridge the gap.  Meanwhile, I scored 2,047 in June premiums.  Average monthly premiums are now at 1,481.

 

SPENDING:

Total spending for the month chimed in at 1,139.  There were still a few home repair expenses in the form of paint and brushes but that repair is now complete.  The big ticket item continues to be my Obamacare premium at 243 a month.  I am staying well below withdrawals and building cash for year end.  Paint me a happy lizard.

Devour your prey raptors!

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Covered Call GlaxoSmithKline (GSK)

Another covered call in GSK expired out of the money.

music selection:  “Black Betty” — Ram Jam

I really thought I’d have exited this position by now but GSK continues to exhibit some price weakness.  The position is performing acceptably though thanks to options premiums.  On the 20th, I sold GSK160729C00043000 for 65 cents a share.  The trade will be in force for 40 days and yields 13.79% annualized.  Since Brexit, the underlying has been performing a little better and I may be able to exit the position at expiry.  If not, the underlying yields over 5% and it worth holding on its own.

Devour your prey raptors!

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