I sold a strangle on PennyMac Mortgage Investment Trust (PMT) on Tuesday.

music selection:  “Sympathy For The Devil” — Motorhead (Lemmy kills it on this one!)

weigh-in:  211.0 (1.6) – very happy with this week’s result

Liquidity was hard to come by for PMT so I ended up going out to April to get filled.  I sold PMT160415C00015000 for 25 cents a contract.  That trade will be in force 89 days and yields 6.84% annualized while leaving a high probability of collecting a 47 cent dividend – tasty!  I also sold PMT160415P00012500 for 80 cents a contract.  That trade will also be in force 80 days and yields an impressive 26.25% annualized.  The combined position yields an average of 16.54% annualized.  Not bad considering the double digit dividend yield is also available.

This one has taken a little bit of a beating as institutions have been selling (this was a former hedge fund darling.)  There has also been a general sell off in the REIT space which I think is overblown.  I feel pretty good about my chances with the PMT strangle.

Devour your prey raptors!

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