I opened a buy/write on HCP.
music selection: “Lights Out” — Santigold
weigh-in: 219.0 (0.2) – disappointing week
HCP is a REIT that is focused on the medical space. They particularly own a lot of nursing care homes and stand to benefit from the increasing need for long term care for aging baby boomers. The company has a long history of raising its distribution. I bought shares at 36.33 and have a yield on cost basis of 6.73%.
To juice returns, I sold HCP160617C00037500 for 65 cents a share on the 6th of May. The trade will be in force for 43 days and yields 15.17% annualized versus my cost basis. That is a potential for a combined 21.9% annualized total yield. There is potentially some interest rate risk exposure here but I think the fears the Fed will raise the benchmark rate by a large amount are overblown. At least I’m sure enough to risk hard earned money on it.
Devour your prey raptors!