Over the weekend, AFSI and SDLP expired out of the money.
music selection: “Blame Me” — The Pretty Reckless
weigh-in: 204.4 +0.0
AFSI is a promising insurance company that is suffering under an accounting scandal. They recently sold the unit that the irregularities occurred in. I’m down 9.26% in the trade but hope to recover. Today I sold AFSI171215C00017500 for 15 cents a share. The trade will be in force for 89 days and yields 3.52%. My loss in the play falls to 8.40% with the collection of the premium.
Seadrill Partners is a drillship MLP that is struggling with the price of oil. I got in after the price of shares fell sharply with a cost basis of 3.74. I’ve been writing a covered strangle on this name for income. My last strangle expired out of the money over the weekend. Today, I sold SDLP171020C00005000 for 5 cents a share and SDLP171020P00002500 for 10 cents a share. Both trades will be in force for 89 days and yield an average of 10.25% annualized. I remain eligible to collect the underlying distribution of 11.94%. I judge both contracts as being unlikely to be assigned and plan to repeat the trade at expiry.
Navios Maritime Midstream Partners L.P. (NAP) is a new name for me. This is a dry goods bulks shipper that has seen recent share weakness. I think the market is overreacting to the recent weakness in bulk dry goods shipping day rates as Navios has over 90% of its fleet locked into long term contracts. They can weather this storm. I sold NAP171020P00007500 for 40 cents a share. The trade will be in force for 33 days and yields 58.99% annually while enjoying 5.71% downside protection. I will be happy to get assigned at 7.50 as the underlying yields an additional 23% annually.
Devour your prey raptors!