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!

Sell Covered Calls Suncoke Energy Partners (SXCP)

Never miss another opportunity to devour prey!

Leave a Reply

Your email address will not be published. Required fields are marked *


This site uses Akismet to reduce spam. Learn how your comment data is processed.