On Monday I opened strangle on DCP Midstream Partners LP (DPM).
music selection: “I Missed Again” — Phil Collins
Earlier, I was assigned shares on DPM puts. I now own 300 shares which I have written successful covered calls against. I have gone back to write another 3 puts to complement a new set of 3 covered calls.
DPM151218P00022500 was sold for 0.40 a contract. DPM151218C00030000 was sold for 0.10 a contract. Total premiums are thus fifty cents. Against a cost basis of 30, this trade open for 26 days, yields and annualized 23.40%. Only one of the contracts can be in the money at expiry so at least half of the trade will be a winner. My biggest ‘downside’ is to own more shares of this high yielding midstream company at a great price. I call that a sure bet.
Devour your prey raptors!