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More options trades

I was assigned EOG and NVDA over the weekend.

music selection:  “Change It” — Stevie Ray Vaughan

weigh-in:  215.0 (1.0) – progress!

EOG Resources (EOG) was assigned over the weekend at 95 dollars a share.  I wrote a covered call at the same strike this morning.  I sold EOG170609C00095000 for 1.70 a share.  The trade will be in force for 40 days and yields 16.33% annualized.  EOG is the low cost producer of shale so I expect to do well here.

Nvidia (NVDA) was also assigned over the weekend at the 108 strike.  I wrote a covered call at 108 to keep the cash coming in.  I sold NVDA170609C00108000 for 4.20 a share.  The trade will be in force for 40 days and yields a strong 35.49% on an annualized basis.  I was surprised to see the stock drop but I expect it will be back due to a strong position in the specialty chip market.

A new position for me is Micron Technology (MU).  This is a maker of computer memory.  I like this sector because it is highly cyclical.  It takes a long lead time to build out new capacity so memory goes through boom and bust pricing cycles.  It appears a new boom cycle is upon us.  I sold MU170609P00028000 for 1.12 a share.  The trade will be in force for 40 days and yields 36.50% annualized while enjoying 4.58% downside protection.

Finally is Archer Daniels Midland (ADM).  I’ve traded in and out of this one a few times in the past.  It is a big and stable mega cap with a bright future due to a rising middle class in China and India.  It makes for a great and safe trade when options premiums get plump.  I sold ADM170609P00045000 for 1.00 a share.  The trade will be in force for 40 days and yields 20.28% annualized while enjoying 3.89% downside protection.

I’ll be back tomorrow with April Transparency.

Devour your prey raptors!

{ 5 comments… add one }
  • Steve May 2, 2017, 4:07 pm

    The more interesting thing with MU in my opinion is the 3D-XPoint technology that they developed with Intel. The technical details of this new technology are not being shared, which is sad for me, since I’m an electrical engineer, but the performance results on the first products made with it (Optane) are pretty impressive.

    Essentially, the technology is something that is in between the performance of an SSD and the RAM inside your computer. Since we don’t really know much about how it actually works, I can’t say whether it would ever completely replace the SSD market, but there’s a good chance that it captures a decent part of that market. It’s also possible that just as SSDs were initially used in conjunction with standard hard disks, but now are used on their own that Optane drives will eventually be used on their own as well, supplanting the SSD market. Of course, MU is in the SSD market too, so without knowing the details of the technology or the terms they have with INTC, it’s hard to know how good this situation is for them.

    I’ve been wanting to learn more about the agreement between MU and INTC as well as more about the technology itself, but I’ll be watching how you do with MU with great interest.

  • Chris B May 2, 2017, 5:28 pm

    Reading the annualized ROIs makes me wonder how much cash (if any) you keep on hand. Obviously some must be held over the weekend between expiration and rolling. Any more than that?

    • The Lizard King May 2, 2017, 5:43 pm

      I keep just enough cash on hand and sometimes even a little less. Margin rate at IB is about 1.7% so if I end up in a loan position, it is trivial to my return.

  • MD May 8, 2017, 12:49 am

    hi Raptor,
    isnt there a typo in your expiration dates – should be 170609?
    Thanks
    MD

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