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New trades in GRUB and NAP

Three positions expired over the weekend.

music selection:  “Do You Love Me” — The Contours

weigh-in:  206.8 +2.0 – doh!

GRUB and SXCP expired out of the money on Saturday.  NAP ended with shares being assigned.  Performance of SXCP was as expected but GRUB ran away a little while NAP languished.  None of the three really offer knock it out of the park risk/reward setups any longer.  I’m sticking with the trades to see how they play out.  I was not able to get a fill at an attractive price for SXCP covered calls and may try again tomorrow at a longer dated expiry.

Navios (NAP) shares were assigned at 10.00 a share.  The price promptly fell all the way to 7.82 and actually threatens to stop out of the trade.  I sold NAP180216C00010000 for 10 cents a share.  The trade will be in force for 89 days and yields 4.10% annualized as a target.  This isn’t as bad as it looks as the underlying yields about 21% at today’s price.  After all option premiums collected are considered, my 25% trailing stop is set at 6.60.  Today’s closing price is 7.94 so I have 1.34 or 16.88% breathing room before I need an upturn to stay in the trade.

GrubHub (GRUB) moved up from about 50 to 64.50 during the holding period.  I was hesitant to write a new put at an elevated strike but the premium offered is still fairly fat.  I sold GRUB171229P00064500 for 2.40 a share.  The trade will be in force for a 40 days and has a target yield of 33.95% while enjoying 4.02% downside protection.  This is another stock like Ten Cent or Market Axess that benefits from Metcalf’s Law.  They have a network that gains value as it adds nodes.  It should be a wild ride.

Finally SunCoke (SXCP) did not fill at 10 cents after patiently waiting.  Another trader got filled at 10 cents today but I couldn’t get the same benefit.  One possibility is to go down a strike and risk getting called away at a short term capital loss to earn some more income.  The next available strike is at 17.50 and the underlying is at 17.25.  Shares were last above 17.50 in August so that could be a risky move.  I’d need very attractive pricing to make the trade worthwhile.  It could however, be a graceful way to exit a trade that is merely performing instead of out performing.

Devour your prey raptors!

 

{ 4 comments… add one }
  • Maria November 21, 2017, 8:37 am

    Thanks for the update regarding the NAP put option. I was also short a put option, but I had rolled days ago to February. I am now reading up on Brookfield Infrastructure Partners (BIP). I really need to understand how these “limited partnerships” work before jumping in.

    • The Lizard King November 22, 2017, 1:24 pm

      If you hold these in a taxable account, be prepared for a minor hassle at filing time. There are a lot of nuances to filing a K-1

  • Chris B November 21, 2017, 10:14 pm

    I wouldn’t want to hold SXCP or NAV through a correction. They’re shaky in the best of economic times. GRUB on the other hand seems worth pursuing when you can target 33% annualized from the puts (and presumably the calls too).

    • The Lizard King November 22, 2017, 1:25 pm

      I’m watching my stops for sure. A lizard has to live to trade another day.

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