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Tuesday Trades 21FEB2017 – FNMA, PMT, SXCP, GEL, NAP

I made five trades today.

music selection:  “If You’re Gone” — Matchbox Twenty

weigh-in:  211.0 (0.4)

First off, in the non-options space, I sold out of Fannie Mae (FNMA).  A judge ruled today that hedge funds don’t have a legal right to sue the government over the profit sweep.  Shares fell 30% on the announcement.  The thesis might not be dead as the hedge funds will probably lobby Congress and President for a new ruling but for now I’m out.  I sold 2,631 shares at 3.10 a share for a 63.16% gain.

I sold yet another covered call in Penny Mac (PMT) today.  I sold PMT170317C00017500 for 10 cents a share.  The trade will be in force for 25 days and yields 8.34% annualized.  I remain eligible to collect the underlying distribution of 11.1% while I wait to be called.

I was also able to go back to the well for another covered call on Suncoke Energy Partners (SXCP).  This is a metallurgical coal company that I’m high on right now due to the possibility of Trump infrastructure spending.  A lot of steel could be consumed.  I sold SXCP170317C00020000 for 10 cents a share.  The trade will be in force for 25 days and yields 7.30% annually.  Like with PMT, I remain eligible to collect the distribution of 13.6% while I wait to be called.

There is one more covered call on Genesis Energy LP (GEL).  I sold GEL170317C00037500 for 15 cents a share.  The trade will be in force for 25 days and yields 5.84% on an annual basis.  The underlying distribution, if not called, is 8.16%.  I like this one a lot as a Trump play as well.

The final trade for today is a cash secured put in Navios Maritime Midstream Partners (NAP).  The pricing is at a difficult place versus the options strikes to get premium and I’m hoping to ultimately get assigned here.  This one should do well as crude oil exports from the United States to Europe and Asia ramp up.  I sold NAP170421P00010000 for 20 cents a share.  The trade will be in force for 60 days and narrowly meets my minimum yield for writing a put at 12.17%.

I was unable to get acceptable pricing on AMLP or MAA and put those in the watch pile for now.

Devour your prey raptors!

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