I rolled covered calls on DCP Midstream Partners LP (DPM) on Tuesday.

music selection:  “The Last High” — The Dandy Warhols

My old DPM covered calls at the 22.5 and 30 strikes expired worthless over the weekend.  When the markets opened on Tuesday, I replaced them.  There wasn’t much liquidity at the near expiries so I went out to April.  I sold DPM160415C00022500 for 70 cents a contract and DPM160415C00025000 for 35 cents a contract.  Both contracts will be in force for 89 days.  The 22.5 strike yields 12.76% annualized and the 25 strike yields 5.74% annualized.  The 25 strike would result in a 5 dollar a share capital loss in the unlikely event it triggers.  I should also collect an additional 78 cents a share in distributions during the expiry period for another 12+% yield.  Can’t beat that with a stick.

This one is a little beaten up and I think the market is being a little bit irrational.  The financials are sound and there is very little commodity pricing exposure for this midstream operator.  I expect to do well here.

Devour your prey raptors!

Covered calls DCP Midstream Partners LP (DPM)

Never miss another opportunity to devour prey!

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