My shares of PennyMac were called away on Saturday and I’m writing puts to replace them.
music selection: “Dudley” — Yeah Yeah Yeahs
weigh-in: 219.2 +0.2 – Fiddlesticks!
PennyMac is a mortgage REIT that has lately been a hedge fund darling. It yields over 12% and has active options that also pay well. I am doing quite well playing this one. I am however, reducing my exposure by cutting the number of contracts. I’ll be reducing exposure across the portfolio for a couple months unless I see an improvement in the general market. Prices have been pretty good but volumes have been abysmally low and virtually every EFT and mutual fund in the market reports heavy outflows. This is bearish short term but bullish long term. These are signs of fear and fear is not what the top of a bubble looks like. There is more money to be made before ‘irrational exuberance’ returns.
I sold 7 contracts of PMT160617P00015000 for 30 cents a share. The trade will be in force for 26 days and yields 28.08% annualized. I hope to get assigned. Oh yeah, the trade enjoys over 3 percent downside protection.
I’ll be posting daily this week as a lot of trades are queued up.
Devour your prey raptors!