On Monday, I wrote puts on PennyMac Mortgage Investment Trust (PMT).
music selection: “Push It” — Garbage
Previously, I had a buy/write position open on PMT. It was called away. The new position violates my 12% rule by a few basis points. I would have preferred to have gone a strike closer but they were 2.50 apart instead of a dollar. I’m making do. I think this particular play is safe and repeatable though, so I’ll stick with it for as long as it lasts.
I sold PMT160115P00015000 for 0.25 a contract. The trade will be in force 54 days and yields 11.27% annualized. Spot price was 16.16 when the contract was written providing 8.73% downside protection. The extra downside protection is what we get in exchange for giving up a little yield by being closer to the money. I’ll be delighted to get assigned but I don’t think it is likely.
Devour your prey raptors!