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Monday Trades BX and ORCL

Blackstone expired out of the money over the weekend.

music selection:  “Wolves At The Door” — Bad Seed Rising

weigh-in:  204.6 +0.2

Blackstone (BX) has disappointed but thanks to options premiums, I’m roughly breakeven on the position.  My covered call expired out of the money over the weekend.  This morning, I sold BX171103C00034500 for 27 cents a share.  The trade will be in force for 40 days and yields 7.14% annualized.  I remain eligible to collect the 6.6% annualized return on the underlying distribution.

I also decided to get back into the Big Cheap Tech theme with written puts on Oracle (ORCL).  Oracle is a mature business that is still growing and sports fat cash flows.  It also rewards shareholders.  I sold ORCL171103P00048000 for 1.09 a share this morning.  The trade will be in force for 40 days and yields 20.72% annualized while enjoying 2.21% downside protection against a decline in share price.  I’ve done very well with this theme in the past and expect to continue to do so.

The simple average for today’s trades is 13.93% annualized.  I collected 299 dollars of instant income that is mine to keep regardless of how the trades ultimately work out.  This upfront cash payment leaves me with lower risk than buy and hold investors.  That leaves me a happy lizard this morning.

Devour your prey raptors!

{ 2 comments… add one }
  • Chris B September 25, 2017, 9:23 pm

    Getting paid 2% to buy shares ATM in 39d is a pretty good deal. Tech stocks have been declining for the last few days, so maybe it’s a good time to sell puts.

    Off topic: .VIX rose almost 8% today and UVXY rose 0.09%. What a product! I’m still developing my idea to do a spread going long .VIX and short UVXY. Yet the correlation is so weak that it’s guesswork to get the ratios right to set up a nearly risk-free position based on UVXY’s suckiness as a hedging product. Yes, just selling puts is easy enough, but it’s dangerous to allocate too much to the trade.

    • The Lizard King September 26, 2017, 1:33 pm

      Your idea is interesting but I’m not sure how I’d implement it. I think you are already seeing why it is kind of difficult to use apples to hedge oranges. Best of luck in the trade!

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