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Sell Puts Venator Materials (VNTR)

Opening a new position in Venator Materials (VNTR).

music selection:  “Turn The Beat Around” — Vicki Sue Robinson

weigh-in:  201.0 (3.6)

Venator Materials (VNTR) was spun off from Huntsman in August.  Huntsman retained 80% ownership but then began offloading shares in the public market.  Shares plummeted.  VNTR was also hit with a fire that shut down a key plant for months hurting shares further.  Today, shares have begun to recover.

VNTR is the world’s third largest producer of Titanium Dioxide.  This is a critical component in paints, dyes, and an additive to plastics, fiber products, and more.  Chinese production has been shut down (perhaps permanently) due to environmental violations that led to hefty fines and imprisonment of executives.  VNTR should see strong pricing going forward.

I sold VNTR180518P00017500 for 85 cents a share.  The trade will be in force for 40 days and yields an expected 44.32% while enjoying 6.98% downside protection.  I sold 9 contracts picking up 765 in income on 15,750 in capital at risk.  I expect to do well in this position and think I have something that is well differentiated from my normal fare.

Devour your prey raptors!

{ 2 comments… add one }
  • Chris B April 12, 2018, 3:27 pm

    All these long positions with unlimited downside are making me nervous for you! With CAPE and PE’s and every other metric where they are, why not throw on some bear spreads? A 5% WR doesn’t mean safety if you’re earning that by leveraging long. Just some friendly advice.

    UVXY: The VIX contract spread has been in mostly backwardization for a couple months now. IMO, this could go on for a while, given that the Trump administration is getting more comfortable, starting trade wars, threatening to attack various countries, etc. What do you think? Is the UVXY put trade dead for a while?

    • The Lizard King April 12, 2018, 3:39 pm

      Thanks for being concerned for me. I think I’m as close to as long as I want to get. Looking for good short opportunities but not finding them. Everything has upward momentum. I think I’m going to cut back some position sizes going forward – fewer contracts per position.

      My UVXY bet is dead money probably close to expiration. The drop from double to 1.5x leverage killed the premium and it is going to take a lot of contango decay to recover from that. I’m committed to sticking with it though. Contango is the natural state of futures markets. It will always return.

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