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!

Buy/Write HCP, Inc. (HCP)

Never miss another opportunity to devour prey!

3 thoughts on “Buy/Write HCP, Inc. (HCP)

  • May 19, 2016 at 4:42 am
    Permalink

    You’re not worried about the HCR Manor Care spinoff? I’m not sure how I feel about it. On one hand it’s going to be good for HCP (what’s left after the spinoff), but on the other hand as a sharehder I’m just left holding the bag full of SpinCo shares. I think everyone’s going to want to dump those…but maybe that’s already priced in? How do you value something like that? I need to increase my position in HCP to be able to sell call options. Now might be the time to add so my resulting cost basis is somewhere near a decent strike.

    Reply
    • May 19, 2016 at 2:52 pm
      Permalink

      I think management is making the decisions that ensure the distribution can continue to grow. I plan to keep any spinoffs. They tend to do well if you hold them long enough.

      Reply

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