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!