Six positions expired over the weekend.
music selection: “I Won’t Back Down” — Tom Petty
weigh-in: 206.4 +1.8 – doh!
I have several trades today. The first five are simple covered calls and written puts. The other two are spreads. One is a diagonal call in a new position. The other is a call ratio spread on an existing position that needs some TLC.
First is a covered put on my still open short position in AMCX. I sold AMCX180420P00045000 for 25 cents a share. The trade will be in force for 33 days and yields 6.14% annualized while leaving 4.92 worth of room for capital gains. The AMCX position is 407 dollars in the green with this new 25 dollars collected.
My shares in ON Semiconductor (ON) were called away over the weekend. I am writing new puts for ongoing income. I sold ON180420P00025000 for 90 cents a share. The trade will be in force for 33 days and yields an expected 39.82% annualized while enjoying 4.78% downside protection. The next trade looks even better though!
My puts in Match Group (MTCH) expired out of the money. As with ON, I am writing more puts for ongoing income. I sold MTCH180420P00046000 for 2.09 a share. The trade will be in force for 33 days and yields an expected 50.25% annualized while enjoying 4.54% downside protection.
My calls in Suncoke (SXCP) expired out of the money. This is a metallurgical coal play that I’d describe as having only fair performance. The share price is depressed a small amount but options premiums and the underlying yield of 12.7% have kept me in the black for over a year. I sold SXCP180420C00020000 for 10 cents a share. The trade will be in force for 33 days and yields an expected 5.53% annualized. I remain eligible to collect the strong underlying distribution.
Shares of Blackstone (BX) were assigned over the weekend. I am writing calls against the position for additional income while I hope to collect the underlying distribution yield of 10.06%. I sold BX180427C00035000 for 30 cents a share. The trade will be in force for 40 days and yields an expected 7.82% annualized. I am happy to hold shares or be called so I can write new puts.
Next is a new position. A diagonal call in Lam Research (LRCX). LRCX is the company at the very bottom of the semiconductor industry food chain. They sell the plasma etching and metallic deposition machines that Intel, ADM, and others use to manufacture chips. It is a cyclical but high margin business that is in an upswing. During downturns, they have a strong business servicing and repairing installed machines. I bought LRCX200117C00085000 for 129.80 a share. That is inclusive of merely 10 cents in time value. I am getting leverage very cheaply here. I also sold for income LRCX180427C00250000 for 2.40 a share. The trade will be in force for 40 days and yields an expected 16.87% while leaving room for 16.33% in upside price appreciation.
Finally, I entered into a call ratio spread on Tractor Supply (TSCO). This is a position that has moved sharply against me. The income available on break even strike calls is trivial. I’d like to earn that same income while getting some leveraged upside to allow me to exit this trade at break even at the 75 strike instead of the 80 entry strike. To that end, I bought one call at 70 and sold two calls against the position at 75. This combines a covered call with a bull call spread. Everything over 70, up to 75, earns two to one. Call TSCO181019C00070000 was purchased at 3.39 and calls TSCO181019C00075000 were sold at 1.85 each. That yields a 31 cent per share credit to provide a little boost while I wait for the position to try to repair itself.
Devour your prey raptors!