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Monday Trades

Nine positions expired over the weekend.

music selection:  “Babe” — Styx

weigh-in:  See Dietary Milestone

First, some portfolio maintenance.  In my tIRA account, I stopped out of Altria (MO).  I sold and redeployed those funds plus some extra from dividends into Dow Dupont (DWDP).  The Dow/Dupont merger has always been intended to be short lived.  They were two companies trading at a conglomerate discount that lacked the breadth of product offerings to make productive spinoffs.  The new combined company will be broken up into three companies (a “new” Dow, a “new” Dupont, and a “new” agricultural chemical and seed company.)  I expect the conglomerate discount to fade after the break up.  Additional spinoffs will probably follow.  The agribusiness company will be a strong candidate for buyout by larger players.  I am target a 400% return over a 8 year holding period.

I also sold out of JRO, a closed end fund invested in variable rate loans.  The investment had performed well enough but I grew concerned about the quality of the underlying credit as we are approaching an inversion of the yield curve.  I want to raise cash and hold the highest quality debt instruments.  The cash was no redeployed and instead I raised about 13,000 for the rainy day fund.

First up for expired positions to roll forward is Venator Materials (VNTR) my titanium dioxide play.  I sold VNTR180615P00017500 for 30 cents a share.  The trade will be in force for 26 days and the expected annualized return is 24.07% and the downside protection on the put is 4.87%.

Scott’s Miracle Grow (SMG) is my picks and shovels play for the marijuana industry.  It has not performed as well as hoped but still meets my minimum requirements.  I sold SMG180615C00090000 for 1.00 a share.  The trade will be in force for 26 days and the expected annualized return is 15.60%.

ON Semiconductor (ON) was assigned several weeks ago and I am writing covered calls to earn additional income.  I sold ON180615C00025000 for 45 cents a share.  The trade will be in force for 26 days and the expected annualized return is 25.27%, which is pretty strong considering the calls are a couple strikes out of the money.

Match Group (MTCH) took a kneecapping when Facebook announced it intended to begin competing with the company.  I don’t think this is a credible threat as I don’t believe people are going to want to mix their dating efforts with the site they use to share backyard bbq pics with grandma.  Shares have already begun to recover.  I was assigned over the weekend none-the-less and am writing calls while I wait for the price to come back to par.  I sold MTCH180615C00046000 for 30 cents a share.  The trade will be in force for 26 days and the expected annualized return is 9.16%.  I had already earned 8.69 in premiums from writing puts so despite the sharp price decline, I am up over 8% in the trade.

Macquarie Infrastructure is a buy to hold yield play that I am writing out of the money covered calls on for bonus income.  Calls expired worthless over the weekend and I am going back for more.  I sold MIC180720C00042500 for 15 cents a share.  The trade will be in force for 62 days and yields an expected 2.08% annualized.  In the unlikely event shares are called away, I will collect another 5.48 in short term capital gains.  I remain eligible to collect the underlying 10% yield.

Prospect Capital is a long term holding that has a strong and sustainable yield around 11%.  There are sometimes opportunities to pick up a few percent more with covered calls.  To that end, I sold PSEC180817C00007000 for 5 cents a share.  The trade will be in force for 89 days and yield an expected 2.93% annualized.

I got a partial fill in covered calls on Suncoke (SXCP).  This is a high yield metallurgical coal play that sometimes has a covered call opportunity.  I sold one out of five calls SXCP180817C00020000 for 5 cents a share.  The trade will be in force for 89 days and yields an expected 1.03% annualized.  I will try to sell the other four calls again tomorrow but liquidity is very low at this strike.

I failed to get a fill today in covered calls for Brighthouse Financial (BHF) and a covered put in AMC Networks (AMCX).  I will probably try to go out to further expiries to find more liquidity tomorrow.

Devour your prey raptors!

 

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