Four positions expired over the weekend.
music selection: “Jamming” — Bob Marley; speak up in the comments if you dig it!
weigh-in: 204.8 +1.8 – doh!
PMT, SM, and NAP expired out of the money over the weekend. EOG shares were called away. I say goodbye to EOG and SM for now as I seek to reduce exposure to a stubbornly weak oilfield. Unrelated, I got a great deal on close to expiry pork loin at Kroger today. The freezer is well stocked.
I sold NAP171117P00010000 for 1.10 a share. It was necessary to move up to the 10 strike from 7.5 as NAP has had strong performance over the last month. The strike is in the money by about 70 cents so the time value is really only about 40 cents out of the buck-ten. The trade will be in force for 26 days and yields a terrific 154.42% annualized in the event it expires out of the money. The time value portion alone is worth 56.15% annualized. Either way this is a good trade. I’d be delighted to be assigned this solid company with long term contracts on its vessels and collect the underlying 16.9% yield while writing covered calls for strong bonus income.
I also sold PMT171215C00017500 for 15 cents a share. The trade will be in force for 54 days and yields 5.79% annualized. That is bonus income as the underlying yields 11.14% on the distribution. This is one of my favorite mortgage REITs. I expect the sector as a whole to do well as the Fed tightens gradually. The best REITs will be hedged against this and will see margin expansion on new assets.
The average return on these two trades is a ridiculous 80.11% annualized. I collected 1,190 in instant income that is mine to keep no matter how the trades turn out.
In other news, my UVXY puts are close to ripe. It looks like out of the money is going to beat in the money in the A/B test. In additional other news, I am attending FinCon17 in Dallas Wednesday through Saturday. Come join me for a beer. Mr.1500 is allegedly buying.
Devour your prey raptors!