I wrote covered calls.
music selection: “The Living Years” — Mike + The Mechanics
I have held 1,400 shares of PSEC since March of 2018. I originally purchased the shares to write calls against as premiums were fat and the underlying had a nice yield. Premiums had fallen to where the risk of getting called didn’t justify the potential yields and I stopped writing calls. Today, premiums are attractive again.
My original cost basis is 6.65 per share. Current price is 6.55 and I wrote 14 covered calls against my 1,400 shares. I got 20 cent pricing for the 19MAR2021 expiry. The trade will be in force for about 40 days and yields an expected 26.07% annualized. The underlying yield is an additional 10.99%, making for an attractive combined return. It has been a very long time since shares were above 7 so I think it is unlikely I will be called despite a recent rally. RSI is also near overbought territory so it looks like the rally is about out of steam. I hope to write additional calls against the position when these calls expire so long as I can get 8% annualized yield for my efforts.
Devour your prey raptors!