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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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Write Put PennyMac (PMT)

My original put in PMT expired out of the money and I’m back for more.

music selection: “Godzilla” — Blue Oyster Cult

weigh-in: 217.2 (1.4)

I picked up 30 cents per share on my last put but the price has risen since then and puts at the 15 strike aren’t as attractive.  Last Monday, I sold PMT160715P00015000 for 15 cents a share.  The trade will be in force for 26 days and yields 14.04% annualized.  The trade also enjoys 8.33% downside protection.

The price here has come back down with the Brexit carnage on Friday.  Maybe even enough to get assigned.  Either way, next month’s option premium should be higher.  Assignment is desirable as the underlying would yield 12.53% in dividends.

Devour your prey raptors!

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Update Discounted Bonds

Another pair of bonds sold on Friday.

music selection:  “Ice Ice Baby” — Vanilla Ice

On 11JAN2016 I purchased two bonds.  This was the Freeport McMoran 2.375, 15MAR2018 maturity.  I paid 72 cents on the dollar, twelve dollars in commissions, and 15.70 in accrued interest.  On Friday, I sold the bonds for 98.9 cents on the dollar.  I paid 4.25 in commissions and and collected 13.72 in accrued interest.  The trade was in force for 165 days and round trip, yields 81.92% annualized.  In all, 1,467.10 capital was at risk and I cleared 2011.23 for 543.53 in profit.  I think the risk/reward proposition on that beats owning either FCX or the yield on options on the same.

Devour your prey raptors!

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Covered Call HCP, Inc. (HCP)

I wrote another covered call on HCP.

music selection:  “Iodine” — Icon For Hire

A previous covered call expired out of the money and I’m back for more.  The strategy here is to earn a blended return of dividends and capital growth while taking an options bonus.  Shares were purchased at 36.33.  On Monday, I sold HCP160715C00037500 for 10 cents a share.  The trade will be in force for 26 days and yields 3.74% on an annualized basis.

In other news, it appears the Brits have voted to leave the European Union.  Expect lots of volatility and emotional sell offs in the market today.  It is overblown.  Britain only accounts for about 3% of the S&P 500 sales.  The US will recover from this and so will the UK.  It is going to be a rough time for the UVXY trade though.

Devour your prey raptors!

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Update discounted bonds

Half a bond position cleared limit order today.

music selection:  “Rhythm of Love” — Scorpions

On 17DEC2015, I purchased two units of the Transocean (RIG) 6.500 coupon, 15NOV2020 expiry bond.  I paid 69.352 cents on the dollar and paid commissions of 7 dollars.  I also paid 42.96 in accrued interest.  One of the two bonds sold today.  I received proceeds of 91 cents on the dollar, paid a 8.75 commission, and received 7.76 in accrued interest.  The bond also has one paid coupon for an additional 32.50 in return.  The trade was in force for 189 days and has an annualized round trip return of 59.94% after fees and interest.  I have moved up the limit order on the remaining bond to an ask of 92 cents on the dollar.  I think I can get it if there is some near term price strength in the oil market.  Overall, I pocketed 223.01 in profit for 718.50 put at risk in just six months time.  I feel this was done with less risk that investing in stocks or options.  Once I get some long positions called away from in the money covered calls, I will deploy some more capital to this strategy.

Devour your prey raptors.

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Write Put Alliance Resource Partners (ARLP)

My original put in ARLP expired out of the money.

music selection:  “Put Me In Your Lay Away” — Muddy Waters

Alliance Resource Partners is one third of my three part position in high yielding thermal coal.  There are a lot of losers in the space but I found three real survivors.  ARLP currently yields over 11%.  I can do better with options though and am looking to be assigned at a favorable price.  On Monday, I sold ARLP160715P00015000 for 45 cents a share.  The trade will be in force for 26 days and yields an impressive 42.12% annualized.  In addition, the trade enjoys 6.67% downside protection.

The three part position is doing very well.  The industry as a whole is in terminal decline but I think there is good money to be made as the survivors wind down to zero.  The three tickers are AHGP, ARLP, and CNXC.

Devour your prey raptors!

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Write Put Alliance Holdings (AHGP)

My old put in AHGP expired out of the money.

weigh-in:  218.6 (0.6)

music selection:  “Lazy Eye” — Silversun Pickups

With ARLP and and CNXC, AHGP is part of a combined income position in thermal coal.  These three coal miners are the survivors of the rout in coal prices and remain profitable and high yielding.  Two of the names have options and allow even more yield.  Today, I sold AHGP160715P00020000 for 65 cents a share.  The trade will be in force for 26 days and yields an impressive 45.63% annualized.  Seriously raptors, that is not a typo.  The trade also enjoys 3.64% downside protection.

My hope is to get assigned and begin collecting the 10+% yield while writing enormously lucrative covered calls against the position.  This is an industry that is in terminal decline but there is still a lot of money to be made of the slow decay of the longest surviving firms.

Devour your prey raptors!

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Covered Call Disney (DIS)

My short put in Disney resulted in assignment.

music selection:  “Sweet Dreams (Are Made of This)” — Marilyn Manson

Disney should be firing on all cylinders but has shown some recent price weakness.  I am writing covered calls against the position for income with no plans of capturing upside price.  On Monday, I sold DIS160722C00100000 for 1.18 a share.  The trade will be in force for 40 days and yields 10.77% annualized.  That result is a little disappointing but it is the best the market will give me at the moment.

In other news, I have options positions expiring today:

AHGP looks to expire well out of the money.

ARLP is close to the money and may result in assignment.

HCP will expire well out of the money.

PMT will expire out of the money without assignment.

GSK will expire out of the money and I will retain shares.

PSEC will expire far out of the money and not result in assignment.

Devour your prey raptors!

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Covered Call Cheneire Energy (LNG)

More shares of LNG were assigned over the weekend.

music selection:  “Shake, Rattle, And Roll” — Elvis Presley

Cheneire Energy (LNG) is a little bit different from my normal strategy.  Instead of playing for current income, I’m angling for capital gains.  LNG is an arbitrage play on the difference in the price of natural gas between North America and the rest of the world.  They are building out export infrastructure to capture a huge profit.  I think the company has a bright future.

On Monday, I sold LNG160722C00042000 for 18 cents a share.  The trade will be in force for 40 days and yields less than five percent.  But it is 24% out of the money, leaving me a lot of room to capture capital gains.  I think this one can be a five bagger given enough time.  I’ll keep writing out of the money covered calls until shares or called or the infrastructure build out is complete and the stock appears fully valued.

Devour your prey raptors!

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Update Discounted Bonds

I sold another of my discounted bonds today.

music selection:  “Sound Of The Bell” — Veruca Salt

On 15JAN2016, I picked up the Weatherford 5.125 15SEP2020 maturity bond for 75.954 cents on the dollar.  I paid two dollars in commissions and 35.88 in accrued interest.  Today, I sold the same bonds for 95 cents on the dollar, paying 2.75 in commissions and collecting 26.19 in accrued interest.  During the holding period, I picked up 51.24 in additional interest from a coupon payment.

The trade was in force for 151 days and yielded 64.85% annualized.  This one benefited greatly from the recent run up in crude prices and a tender offer for early redemption.  I decided to take my profit now rather than wait until 2020 for the remaining five cents on the dollar.  All together, my portfolio of discounted bonds, including closed positions, is up $3,077 and has returned an additional $2,020 in interest.  I feel this has come with less risk and volatility than my long stock positions and options trades.  I’ll be looking for more deals on discounted bonds in the future.

Devour your prey raptors!

 

 

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