Multiple positions expired over the weekend.

music selection:  “Gimme Sympathy” — Metric

weigh-in:  197.4 +0.4

I am saying goodbye to a couple positions.  The recent volatility has made it clear to me I am overexposed and need to play better defense while raising cash.  Ingersol Rand (IR) was called away.  I will not be writing new puts on that issue, thereby raising 10,000 in cash.  Starbucks (SBUX) had a strong run up and my puts expired well out of the money.  The company is still somewhat attractive for put writing but at the current price and my current level of exposure, the risk/reward ratio does not justify opening a new position.

In addition, I tried to roll two positions that did not fill at acceptable pricing today.  Those are a covered call in XLC and a covered call for MTCH.  I will continue trying to get fills but will probably go further on expiry than the 33 days I attempted today looking for more liquidity and a fill price that is less overwhelmed by 70 cent Interactive Brokers commissions.

I sold a covered call on Brighthouse Financial (BHF).  The stock has declined more than most with the recent volatility and is nearing my stop loss.  In an attempt to salvage the position, I am writing a covered call for income at a strike below my entry price.  With any luck, the stock will recover slowly allowing me to collect income without being called away at a loss so I can dig out of a hole.  This of course comes at the risk the stock will fall even further.  I sold BHF181221C00045000 for 40 cents a share.  The trade will be in force for 33 days and yields an expected 8.04% against my cost basis on an annualized basis.  If shares are called away, I will book a 10 dollar per share capital loss.

I am following the same strategy of writing calls at strikes below my cost basis for two more investments.  Among those is Scott’s Miracle Grow (SMG).  I have a basis of 90 and previously wrote a covered call at 80 which expired worthless.  The strategy is working as I am now writing a call at 85, slowing crawling out of the pit.  I sold SMG181221C00085000 for 39 cents a share.  The trade will be in force for 33 days and yields an expected 4.79% against my cost basis on an annualized basis.  If the shares are called away, I will book a capital loss of 5 dollars a share.

Last of the strategy to write covered calls below entry price is Viper Energy (VNOM).  I have an entry point of 39.28.  I sold VNOM181221C00037000 for 15 cents a share.  The trade will be in force for 33 days and yields an expected 4.22% against my cost basis on annualized basis.  If the shares are called away, I will book a capital loss of 2.28 a share.

Finally, a written put in ON Semiconductor expired out of the money.  I am writing new puts but have decreased the number of contracts from 6 to 5.  I sold ON181221P00017000 for 73 cents a share.  The trade will be in force for 33 days and yields an expected 47.50% on an annualized basis.  Clearly, the market is expecting a big move here and I hope to be on the right side of it.

Devour your prey raptors!

Rolling some positions BHF, SMG, VNOM, ON

Never miss another opportunity to devour prey!

2 thoughts on “Rolling some positions BHF, SMG, VNOM, ON

  • November 20, 2018 at 8:11 pm
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    Good timing on the covered calls!

    VIX is back to almost 24, so I bought some February puts at the 16 strike for $0.75. I will probably watch this position drop precipitously but I feel pretty good about exiting with a gain of 50% sometime between now and February 13. The chart history implies we’ll see VIX at 18 or lower within a month.

    Reply

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