Nine positions expired over the weekend.
music selection: “Babe” — Styx
weigh-in: See Dietary Milestone
First, some portfolio maintenance. In my tIRA account, I stopped out of Altria (MO). I sold and redeployed those funds plus some extra from dividends into Dow Dupont (DWDP). The Dow/Dupont merger has always been intended to be short lived. They were two companies trading at a conglomerate discount that lacked the breadth of product offerings to make productive spinoffs. The new combined company will be broken up into three companies (a “new” Dow, a “new” Dupont, and a “new” agricultural chemical and seed company.) I expect the conglomerate discount to fade after the break up. Additional spinoffs will probably follow. The agribusiness company will be a strong candidate for buyout by larger players. I am target a 400% return over a 8 year holding period.
I also sold out of JRO, a closed end fund invested in variable rate loans. The investment had performed well enough but I grew concerned about the quality of the underlying credit as we are approaching an inversion of the yield curve. I want to raise cash and hold the highest quality debt instruments. The cash was no redeployed and instead I raised about 13,000 for the rainy day fund.
First up for expired positions to roll forward is Venator Materials (VNTR) my titanium dioxide play. I sold VNTR180615P00017500 for 30 cents a share. The trade will be in force for 26 days and the expected annualized return is 24.07% and the downside protection on the put is 4.87%.
Scott’s Miracle Grow (SMG) is my picks and shovels play for the marijuana industry. It has not performed as well as hoped but still meets my minimum requirements. I sold SMG180615C00090000 for 1.00 a share. The trade will be in force for 26 days and the expected annualized return is 15.60%.
ON Semiconductor (ON) was assigned several weeks ago and I am writing covered calls to earn additional income. I sold ON180615C00025000 for 45 cents a share. The trade will be in force for 26 days and the expected annualized return is 25.27%, which is pretty strong considering the calls are a couple strikes out of the money.
Match Group (MTCH) took a kneecapping when Facebook announced it intended to begin competing with the company. I don’t think this is a credible threat as I don’t believe people are going to want to mix their dating efforts with the site they use to share backyard bbq pics with grandma. Shares have already begun to recover. I was assigned over the weekend none-the-less and am writing calls while I wait for the price to come back to par. I sold MTCH180615C00046000 for 30 cents a share. The trade will be in force for 26 days and the expected annualized return is 9.16%. I had already earned 8.69 in premiums from writing puts so despite the sharp price decline, I am up over 8% in the trade.
Macquarie Infrastructure is a buy to hold yield play that I am writing out of the money covered calls on for bonus income. Calls expired worthless over the weekend and I am going back for more. I sold MIC180720C00042500 for 15 cents a share. The trade will be in force for 62 days and yields an expected 2.08% annualized. In the unlikely event shares are called away, I will collect another 5.48 in short term capital gains. I remain eligible to collect the underlying 10% yield.
Prospect Capital is a long term holding that has a strong and sustainable yield around 11%. There are sometimes opportunities to pick up a few percent more with covered calls. To that end, I sold PSEC180817C00007000 for 5 cents a share. The trade will be in force for 89 days and yield an expected 2.93% annualized.
I got a partial fill in covered calls on Suncoke (SXCP). This is a high yield metallurgical coal play that sometimes has a covered call opportunity. I sold one out of five calls SXCP180817C00020000 for 5 cents a share. The trade will be in force for 89 days and yields an expected 1.03% annualized. I will try to sell the other four calls again tomorrow but liquidity is very low at this strike.
I failed to get a fill today in covered calls for Brighthouse Financial (BHF) and a covered put in AMC Networks (AMCX). I will probably try to go out to further expiries to find more liquidity tomorrow.
Devour your prey raptors!