I’m going back to Chevron for more puts. This is a very strong vertically integrated oil and gas company that is resilient during downturns. It has strong dividend growth so I’m happy with the possibility of short term market volatility resulting in my being assigned. Besides, there will be lots of opportunities to write covered calls on such a position for bonus yield while I wait for appreciation.
WHAT: Sell CVX150417P00100000 for 1.65. This yields 3.9% downside protection versus the current spot price. Return is 1.65% or 19.8% annualized. Assignment will result in a 4.35% yield. Tasty.
The last time I went with CVX, I did a buy-write that returned over 70% annualized. There is no longer that much volatility in the market now that oil futures have gone back into contango (traders are betting real money the price is stable or rising rather than falling in the future.) For example, New York crude for April delivery is at 43.02 a barrel (CLJ15.NYM) while crude for May delivery (CLK15.NYM) is at 44.96 as of this writing. This is our best indicator of future prices as it represents the premium real buyers are paying for future oil today.
Devour your prey, raptors!