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!

Covered call Prospect Capital (PSEC)

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