I’m going back to the well on SunCoke Energy Partners, L.P. (SXCP)
music selection: “In The End” — Black Veil Brides
weigh-in: 221.0 (0.8) #loser
Back on the second of the month, I did a buy/write on SXCP. It expired on Friday and I retained my shares. Today’s price is 12.19. Versus my cost basis of 11.93, I have an unrealized gain of 53% annualized (15 days.) The annualized gain on the premium is 46.91%. Not too shabby.
I will continue to work near the money covered calls on this position. This is an income play, rather than a growth play so the focus is on getting paid well today. I am writing SXCP151120C00012500 for 30 cents. The trade will be open 33 days. Annualized return will be an impressive 26.55%. There is still room for capital gains and SXCP has a strong dividend if I continue to retain my shares.
Yields like this remind me that the conventional wisdom on early retirement is that you need 25 times you annual expenses saved because it is unsafe to draw down more than 4% a year. I say hogwash. High yield stocks, a higher than conventional bond allocation, and writing options for income allows for a much higher than 4% yield that is very stable. You need never sell shares to fund your lifestyle.
Devour your prey raptors!