My previous strangle of PMT expired out of the money over the weekend.

music selection:  “Talk To Me” — Stevie Nicks

weigh-in:  216.8 (1.2) – Finally!  Some progress

PennyMac is a nice little REIT that is currently a hedge fund darling.  It yields over 13%.  It also has options so I’m cleaning up on income here.  For the covered call leg, I sold PMT160520C00015000 for a nickle.  It doesn’t yield much, 3.69% over 33 days, but its bonus yield above the fat dividend stream.

For the written put leg, I sold PMT160520P00012500 for 20 cents a contract.  The annualized yield is 17.70% over 33 days.  The trade enjoys 8.14% downside protection.  It seems unlikely I will get assigned here but I will be very happy if I am.

Devour your prey raptors!

Strangle PennyMac (PMT)

Never miss another opportunity to devour prey!

2 thoughts on “Strangle PennyMac (PMT)

  • April 18, 2016 at 8:22 pm
    Permalink

    Any idea why the yield is so high for the stock? What is the reason for the stock being low compared to 2013 peak?

    Reply
    • April 18, 2016 at 9:00 pm
      Permalink

      I think it is just typical of the REIT space right now. They have tax incentives to pay a large portion of cash in distribution. There is some perceived interest rate risk if the Fed starts raising rates so prices across the sector are down.

      Reply

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