A call expired out of the money over the weekend.

music selection:  “In The Waiting Line” — Zero 7

weigh-in:  210.0 n/c

Performance in Blackstone (BX) has been a little disappointing as far as short term moves go.  I think this is a stock that would make a good long term buy and hold.  It has not been immune to trade related news however.  I am down 1.4% after options earnings.  Today, I’m writing a new covered call to earn additional income while I wait on price recovery.

I sold BX190712C00039500 for 57 cents a share.  The trade will be in force for 40 days and yields an expected 13.17% on an annualized basis.  This is a pretty good yield for a stock that has been moving against me.  I think that shows the power of the covered call approach.

However, as the bull market wears on, I’ll be looking to exit long stock positions and write more net debit spreads to lower my exposure while still earning acceptable income.  I’ll also be tightening stops to raise cash into the upcoming bear market so I can tilt into distressed bonds.  A once in a decade opportunity in distressed bonds is right around the corner.  I hope to have enough dry powder to take advantage.

Devour your prey raptors!

Covered Call Blackstone (BX)

Never miss another opportunity to devour prey!

2 thoughts on “Covered Call Blackstone (BX)

  • June 3, 2019 at 9:28 pm

    The 10y/2y and everything shorter than the 2y is now inverted. I would say close out of covered calls and switch to far-ITM bear spreads within this month. The market bottom has historically led the recession by several months – but everyone knows this so there could be a rush to get out early.

    Of course, it all depends on whether Mr. T backs down on trade disputes and starts focusing on winning the next election. That could happen.

    You might do well to accept running a small deficit for a few months rather than continuing to earn a living with bullish leveraged positions that could blow up during a dip. On a more philosophical level, it seems like one has fewer strategic investment choices available when one is required to draw living expenses from the portfolio. For example, a portfolio of treasuries plus long call options doesn’t throw off cash on net, and probably wouldn’t work for you. This would be the case even if it was the best way to preserve purchasing power for a bond opportunity while also ensuring the stock market doesn’t run away without you when Mr. T reverses course or strikes a symbolic deal. As an accumulator, I could make such a move. That’s just one example.

    How do you go in risk-off mode without losing income?

    • June 4, 2019 at 12:02 am

      You can’t go into risk-off mode without losing income. I can cut back to just 85-90% of my budget instead of 175.32% I’m pacing for the year though and raise plenty of cash. I’m currently keeping my covered calls but writing at the first strike below my entry price. Earn some income and hopefully exit gracefully. All new positions are net debit spreads with an increasingly bearish stance. If I’m wrong on the covered calls, I’ll respect my trailing stops. Either way, I raise cash.


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