My SIRI put expired in the money over the weekend and was assigned.
music selection: “Black Sheep” — Metric
weigh-in: 204.8 (0.2)
I was assigned 1,800 shares of Sirius XM (SIRI) over the weekend with a cost basis of 5.50 a share. Sirius is a fine company with great scalability and strong cash flow but I’m more interested in the fat options premiums it supports. I sold this morning, 18 contracts of SIRI171222C00005500 for 14 cents a share.
The trade will be in force for 40 days and has an expected annualized yield of 23.23%. I collect 252 in instant income that is mine to keep win, lose, or draw. Importantly, the expected yield trounces the long term return of the S&P easily. I’d much rather invest this way than to buy and hold the index. My returns are better and because of the upfront income, my risk is actually lower.
I got a little bit of bad news from my broker. Interactive Brokers is no longer going to allow any type of partnership holdings in its tax advantaged accounts after the 30th. I will have to exit my UVXY long put trade by then and find a way to redeploy the funds. With some excess cash I have on hand in that account, I expect to have about 20,000 to deploy.
I am currently leaning towards adding more insurance exposure with that 20k. When they are underwriting properly, insurance companies are powerful compounders of wealth. The float serves as a margin loan with a negative interest rate. Even very conservative insurance companies that put most of their float in bonds can do very well. I like Arch Capital Group (ACGL) and HCI group (HCI) for their long history of profitable underwriting and strong growth in book value per share. Both appear to be attractively priced. I’ll keep you posted on what I do once I exit the UVXY position held in the tIRA account.
Devour your prey raptors!