SXCP rallied over 6% yesterday, moving them into a range where covered calls are attractive.
music selection: “Dear Maria, Count Me In” — All Time Low
I was assigned shares of SXCP all the way back on 20JAN2017. Most of the time since then, there has not been a good opportunity to write covered calls. I have continued to hold shares however as the underlying 12% yield provides plenty of compensation while I waited for better days. The time has finally arrived.
I sold SXCP180216C00022500 for 15 cents a share. The trade will be in force for 25 days and yields 10.95% annualized versus my cost basis of 20 dollars a share. If exercised, I will realize an addition 2.50 in long term capital gains. That would be worth another 12.50% (gross); and I think it would be misleading to annualize that into a triple digit return over 25 days when the holding period has been much longer.
At any rate, I expect the calls to go unexercised and to remain eligible to collect the underlying distribution and to write additional covered calls in the future. Altogether, I have collected 3.83 a share in premiums and distributions making my current long term gain in the security 24.88%. Not too shabby for a slow moving metallurgical coal MLP.
Devour your prey raptors!