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Write Puts Century Link (CTL)

CTL was called away over the weekend.

music selection:  “Tall Cool One” — Robert Plant

weigh-in:  196.6 (1.2)

I originally purchased 600 shares of CTL for 17.38 on 16APR2018.  I wrote covered calls at the 19 strike twice.  On Saturday, shares were called away.  I earned 1,206 on 10,428 in capital at risk over 81 days for an annualized return of 52.12%.

I’d like to get reassigned shares so I’m writing an in the money put today.  I sold CTL180817P00020000 for 78 cents a share.  The trade will be in force for 40 days and yields an expected 35.59% annualized while enjoying 3.37% downside protection.  The intent of this trade is to get assigned and write calls at the 21 strike or higher.

I regularly monitor a basket of property and casualty insurers with a history of strong underwriting.  These companies can be powerful compounders of wealth when purchased at an attractive price.  Currently AXIS Capital Holdings Limited (AXS) fits the bill.  It sells for a discount to its float and has a decades long history of strong underwriting.  It is a little beaten up after taking some losses on the three hurricanes last year but should rebound nicely.  I expect anyone who buys at today’s price to compound their wealth at 12-15% a year for decades.  I already have a full position however and will not be adding more.

Devour your prey raptors!

{ 2 comments… add one }
  • Jason July 11, 2018, 10:21 pm

    King Lizard – Do you sell cover calls on stocks that you plan on holding for the long time for income ? Like property and casualty insurers stocks. Thanks, Jason

    • The Lizard King July 11, 2018, 11:12 pm

      I currently have no covered calls on any of my P&C insurance holdings. They are intended for capital appreciation and their low beta ensures the premiums on offer are almost always unattractive.

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