The markets are open again after the holiday and I am putting capital to work.

music selection:  “Meant To Live” — Switchfoot

I moved to de-risk my portfolio before the election and raise cash.  Now, I have a lot of latent cash that needs to be deployed since it is evident the market is not going to do a post-election nosedive.  I’m going with three closed end funds for income.  And enough liquidity finally arrived to buy some UVXY puts at a reasonable strike.

First is Alpine Global Premier Property (AWP).  This is a closed end fund that is in global equity and a sliver of global debt.  The fund objective is high current income.  Perfect for an income hungry lizard like me.  The fund sells at  nearly 18% discount to net asset value.   A bargain!  It yields 11.43% annualized, paid out on a monthly basis.  This is a full position at 10k invested.

Next up, alphabetically, is Eaton Vance Senior Floating Rate Trust (EFR).  This is a closed end fund that is invested in senior variable interest rate notes.  I wanted to add more to JRO, which is another floating rate CEF I already hold but that one is trading at a significant premium to net asset value.  EFR is trading at a 2.38% discount to net asset value and represents a better value.  The fund yields 6.18% (paid monthly) and has upside in a rising interest rate environment.  This is a half position at 5k, as JRO is already a 1.5X size position.

I also bought Clough Global Opportunities (GLO).  The Fund seeks high total returns through investment in equity, corporate, sovereign global securities and through utilizing an options strategy.  It is another closed end fund that represents a great value as it trades at a 16.21% discount to net asset value.  The fund yields 11.14% percent annually, paid out on a monthly basis.  This is another full position at 10k invested.  These three buys get my 12 month projected distributions back up 23,397 or 97.49% of my projected budget.  That’s sleep at night security.

I also bought some long dated UVXY puts now that liquidity has returned post-split.  I bought 21 contracts of UVXY190118P00020000 for 12.95 a share in my taxable account.  I added another 11 contracts in my tIRA account at the same price.  I’ll hold till around the time the contracts are at the money or around 30 days if things go as planned.  Longer holding periods could be necessary if there is a volatility spike, especially if it is long lasting.

Devour your prey raptors!

Bought AWP, EFR, GLO, UVXY puts

Never miss another opportunity to devour prey!

13 thoughts on “Bought AWP, EFR, GLO, UVXY puts

  • January 18, 2017 at 5:59 pm
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    Hello Lizard,
    Can you help to understand tax complications by holding CEF in IRA or regular account.
    I like your work,
    Thanks
    IK

    Reply
    • January 18, 2017 at 11:13 pm
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      IK,
      CEF’s return a mix of interest, short and long term capital gains, and sometimes return of capital. It is more efficient tax wise to hold them in tax advantaged accounts. I hold mine in taxable as I’m holding them for current income to fund retirement. Thanks for reading!

      Reply
  • January 18, 2017 at 6:57 pm
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    What is your selection criteria behind the UVXY puts? Do you always buy puts which are one year out? How much out of the money do you go? I see three different contracts for Jan 2018 – with 100 stocks, 20 stocks and 4 i guess which is accounting for the reverse split. Which one do you buy and why?

    If there is post you have on this, please let me know.

    Reply
    • January 18, 2017 at 11:11 pm
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      Sted,
      I always buy the furthest expiry out. I want lots of time to be “right” because UVXY can jump 100% the wrong direction in the short term. The options with 20 and 4 shares are pre-split or pre-two-splits. I bought the 100 share contracts but it doesn’t actually matter. The risk/reward profile is the same. The math is just easier with round lots.

      Reply
  • January 18, 2017 at 8:42 pm
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    Is it possible that interactive brokers only offer as low as strike 20 on the UVXY puts? My big investment move for the year is done and thought to have some fun with these but can’t seem to locate these on interactive brokers.

    Reply
    • January 18, 2017 at 11:09 pm
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      I show strikes all the way down to 5 in IB’s webtrader tool. There may have been fewer strikes when you looked. The first day after the split, 25 was the lowest. The market maker, I believe is in control of offering new strikes based on available liquidity.

      Reply
      • January 20, 2017 at 9:57 am
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        I’ll have a look in their trader workstation then. I use the local resellers webtool which is less powerfull but has an easier interface than IB’s trader station. With IB’s trader workstation I am always afraid to make a mistake somewhere and blow up my portfolio! It is a very powerful and broad tool and I am still amazed that something with these possibilities is now available for ordinary retail clients as myself but the interface, o the interface! (The local reseller does offer on line courses in it but since their basic web portal enables me to do all my trades I never really bothered). Your trades are always a fun read and it is a shame CfD’s are prohibited for US residents. The possibilities they offer are really delicious …

        Reply
        • January 20, 2017 at 2:10 pm
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          I use the web trader tool. Usually on my phone. It does everything I need to do without the bazillion extra options and algorythmic trading integration. It isn’t pretty but it is practical. The trader workstation is completely bewildering!

          Reply
          • January 26, 2017 at 4:57 pm
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            I just checked and I do indeed have access to this tool even if iI am a client at a local reseller! Found all the strikes. And even figured out how to enter a trade. You seem to be sitting on a nice profit already. so I’ll give it a pass this month.

  • January 18, 2017 at 8:47 pm
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    How do you determine what is an appropriate price for these puts? ATM the 20 strike is $12.95 but the 22 is $18.50. That doesn’t make any sense to me.

    Reply
    • January 18, 2017 at 11:15 pm
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      I like to go 1/3 out of the money. So with the underlying at 30, I selected 20. The 18.50 for 22 is pretty pricey and probably reflects an older order placed when liquidity was lower. First few days after split can be dicey…

      Reply
  • February 10, 2017 at 8:12 pm
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    Hi Raptor,

    I also bought some UVXY190118P0002000 on the same day – I was the first trade and got filled at $13.40, so much higher than you. UVXY was above $30 at the time and is now just above the strike at $21.79, but there doesn’t seem to be much action on the puts, with the bid/ask at 12.95 / 13.40, and some trades crossed at $13.30.

    Since you say you like to sell your puts when you hit the strike, and we’re getting close, is it normal to see such a small move in the put bid/ask?

    Thanks for everything you share on the blog.

    Reply
    • February 10, 2017 at 10:19 pm
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      This is more or less normal. Bid/ask will get tighter when strike is at the money but only by a little. It is important to use limit orders and be somewhat patient with the fill.

      Reply

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