Rolling BX cc up and out.
music selection: “She Works Hard For The Money” — Donna Summer
weigh-in: 200.0 +1.6 – Stuffed my face at George P. McGovern awards banquet.
On 28JAN2019, I bought into Blackstone (BX) for 33.07 a share. I immediately wrote a covered call. That call expired out of the money over the weekend. I am writing a new call but moving up from the 34 strike to the 35 strike. This lets me earn reasonable income, increase the odds of collecting the 7.60% underlying distribution, and earn some short term capital gains on a stock in a steady uptrend.
This morning, I sold BX190418C00035000 for 39 cents a share. The trade will be in force for 39 days and yields an expected 11.04% against my 33.07 cost on an annualized basis. If shares are called away a price above 35, the yield will be 65.66%. Else, I remain eligible for the underlying distribution of 64 cents a quarter (an additional 18.11% bonus over the 39 days of time in force.)
Blackstone is best in class at the many things it does in the finance space. I have traded it many times in the past and have usually done well. I’m about as extended as I’d like to be right now. BONUS IDEA: If was looking to add more covered call exposure, I would look strongly at Southwest Airlines (LUV) right now. The near the money covered call on 39 days time in force is currently paying around 24%. With capital gains after having shares called at 52.50 the annualized yield would jump to 48.87%. The company is well run and does a fantastic job of hedging its jet fuel commodity exposure. It may be a buyout target by BRK-B as well.
Devour your prey raptors!