Been too busy to report my trades.

music selection:  “Love Is Like Oxygen” — Sweet

I’ve made a few moves around the edges due to the market volatility.  The main action has been some bear put spreads assigning early due to moved deep into the money.

On Monday, a bear put spread in Cheesecake Factory (CAKE) assigned early.  I exercised my hedge to close out the shares.  I earned 135 dollars on 2,365 at risk.  The trade was open for 56 days.  The gross return was about 6% or 37% annualized.

In  other action on Monday, I decided to take profits on Transocean (RIG) puts.  I earned 1,452 against 948 in capital at risk.  The trade was open for 46 days and earned 153% on capital at risk which has an astounding 1,215% annualized return.  Clearly, my hedges are paying off right now.

I have had a good till cancelled order open for the bonds of QUAD (an online printing company with great capital discipline).  I was able to buy CUSIP 747301AC3 for 88.5 cents on the dollar on Monday.  The coupon is 7%, making the indicated yield 7.91%.  With a maturity of 01MAY2022, the yield to maturity is 13.97%.  I consider this a good and safe place to park some cash for yield while I wait for better opportunities in the distressed bond space.

On Tuesday, I closed out another long dated put hedge in COF.  I earned 335 on 950 capital at risk.  The trade was open for 376 and yields 35% or 34% annualized.  It has been a great relief to be hedged and to have some bear put spreads in the mix lately.

Shares were assigned to me early in a bear put spread on Simon Property Group (SPG).  I exercised my hedge to close out the shares.  I earned 315 dollars on 3,185 capital at risk.  That is good for 10% over 37 days or 98% annualized.

Finally, a bull call spread in Bristol Meyers Squibb (BMY) was threatened with one leg out of the money.  I decided to cut my losses and sell for what I could get this morning.  I lost 280 dollars on 470 capital at risk or 60% over 30 days.

It has been a bumpy ride but I think now ravenous lizards playing the home game may be able to better understand why I keep such a large allocation to fixed income and only trade options around the fringes.  It has been a great comfort to just sit out the market these last two Mondays without initiating new positions.  With volatility still being a wild ride, I will probably sit out the market again next week.  At least I am sleeping well at night.

Devour your prey raptors!

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Recent trades

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3 thoughts on “Recent trades

  • March 11, 2020 at 5:34 pm
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    Good job dancing through the options minefield. You don’t have any naked positions, do you?

    I’m eyeballing preferred shares and healthcare REITs like OHI, SBRA, VTR, WELL, and DHC. I wonder if yields or p/fco reach the 6.5% range, could these income-equity investments cover a retirement on a 4-5% WR even as we go through a Japan scenario of demographic graying, ZIRP, disinflation, and near zero growth? Yes, they could always go down more, but it’s also true the knife won’t continue falling forever.

    Reply
  • March 13, 2020 at 12:13 am
    Permalink

    Is this the perfect time to look at put options for UVXY? You used to short this one a lot. Look how high it is getting. Any thoughts on how you would play this?

    Reply
    • March 13, 2020 at 7:51 pm
      Permalink

      I’m a little gun shy of UVXY after the sudden unannounced leverage change. I’d prefer to buy long dated puts on VXX. But now is a good time (my opinion only).

      Reply

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