First some unfinished business from yesterday, then bonds.

music selection:  “Summertime Sadness” — Lana Del Rey

Yesterday, I was unable to sell a covered call in PSEC.  I went further out today and finally got filled about 8 minutes before market close.  I sold PSEC170519C00009000 for 9 cents a share.  The trade will be in force for 117 days (long for  me!) and yields a paltry 3.15% annualized.  It’s all bonus yield over the underlying distribution of 11.5% though.

A long open limit order for the 10.000 coupon 15JAN2018 maturity IHRT bond finally cleared today.  Originally, I purchased the bond on 13SEP2016 for 63 cents on the dollar.  I paid seven dollars in commissions and 33.89 in accrued interest.  Today, I sold for 78.25 cents on the dollar.  I paid 7.75 in commissions and collected 6.67 in accrued interest.  I also collected 50 dollars in coupons during the holding period.  The trade was in force for 133 days and  yielded 76.58% on an annualized basis.

This trade leaves me with just 6 outstanding bonds, half of which are in bankruptcy/debtor in possession status.  I’ll be waiting for a crack in the credit cycle to give existing bonds some weakness to buy into before topping up again.

Devour your prey raptors!

Update Discounted Bonds (IHRT)

Never miss another opportunity to devour prey!

6 thoughts on “Update Discounted Bonds (IHRT)

  • January 25, 2017 at 2:56 am

    This reminds me about how I’ve been executed early on covered calls for high dividend stocks. It shocked me at the time. Basically, if your counterparty can execute before the ex-div date, and the option TV is less than the value of the dividend, their computer program will fire off and trade the remaining TV for the higher dividend. I got stuck with no dividend and commissions to boot!

    Of course PSEC’s monthly 8c dividend is unlikely to trigger such an event unless the price rises to around $8.93 at any time between now and May 19, or a special distribution is announced.

    • January 25, 2017 at 3:01 am

      Yeah. It happens. I’ve been called away early before as well. Part of the game.

  • January 25, 2017 at 9:12 am

    I got called early on a position in coca cola. No surprise as it was into the money but the sucky part was that is was a fairly big postion and it got called in 3 seperate parts sticking me with 3x the commision to pay. The broker I used then was cheap but not as cheap as interactive brokers so the extra 60 euro it cost me still annoys me until this day .. I was like: ‘dude, why not call in one time and save me, and yourself some bucks’ but probably it was not the same guy holding onto the entire position (or big professional where costs are minimal). I made good money on that trade and do realise it is part of the game it just annoys me to see it called on the same day but in three seperate blocks, costing me money …

    • January 25, 2017 at 4:41 pm

      Ouch, that hurts! IB doesn’t have a flat rate plus contract pricing so it doesn’t matter if you get called in blocks or not.

  • February 1, 2017 at 8:34 pm

    What are your thoughts on Sallie Mae / Navient bonds. They’re yielding 8-9% at 20 year durations, but people are freaking about default/deferment rates. Plus, Head Cheeto has made noises about eliminating the Dept. of Education, so you never know.

    Maybe this is the mortgage-backed security of the next few years!

    • February 1, 2017 at 10:34 pm

      I’m skeptical. I’ve seen reports roughly a quarter of student loans are in delinquency. It’s a large pile of debt (over a trillion!) so you might be able to make money if you can be sufficiently diversified across your loan book. It’s in my “too hard” pile.

      Why not a Closed End Fund in the debt space selling at a steep discount to NAV and paying 10%+?


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