Another trade with bearish tilt on an Aristocrat.
music selection: “Anybody Out There” — Digital Summer
weigh-in: 213.8 (0.8) – Progress!
First the closed trades. I have held some Under Armor bonds at 90.0000 for some time. It has recently been trading around par so I put up a good till canceled order at 100.0000. It closed today. I cleared 800 dollars in short term capital gains. I’ll update this post tonight with the full annualized gain when my broker reports my commissions and accrued interest.
[UPDATE] – I originally entered the UA bond on 27APR2020 at a price of 90.0000 paying 8 dollars in commissions and 96.78 in accrued interest. I closed today at 100.0000 paying 15.75 in commissions and receiving 106.17 in accrued interest I collected 130 in coupon payments during the holding period. That brings my total proceeds to 8,220.42 allowing for 915.64 in profit or 12.53 over 196 days which comes to 23.34% annualized. Not bad considering this was a very low risk trade.
The markets really popped this morning. I had a position in Emerson Electric (EMR) that was already threatened before the almost 9% pop. That put the bear put spread well out of the money and around my stop loss. I sold today and booked a 2,328 short term capital loss. It is unfortunate but I had to recover what time value was left as the spread was almost certainly going to zero. Hopefully, I will be able to roll VXX this month due the pop to make up some for that.
This week’s new trade is in Genuine Parts (GPC). This is an auto parts manufacturer and Dividend Aristocrat with 57 consecutive years of raising its distribution. It is a mature company with a stock price that moves slowly making it a great candidate for an in the money bear put spread. I bought the 110/115 spread (with the underlying at 100.50) and 18DEC2020 expiry for 4.55 a share. I picked up 9 spreads putting a little over my 4,000 target for funds at risk. The trade will be in force for about 40 days and has an expected yield of 10% or 90% annualized. I enjoy 9.45% downside protection which is a lot for a mature company over 40 days. I expect to earn the full profit of 405 dollars at expiry.
Devour your prey raptors!