Multiple trades today.

music selection:  “Quite Rightly So” — Procol Harum

weigh-in:  212.0 (2.6)

First a sale.  I have held the 13 strike VXX put with 21JAN2022 expiry for 440 days.  That one went deeply underwater because of Coronavirus.  But today I was able to exit for a small profit.  My original purchase price was $5.25 on 28 contracts, putting 14,700 of cash at risk.  I sold today for 5.35, collecting 14,980.  My profit of 280 dollars is good for 1.9% or 1.58% annualized.  This has basically been dead money but I remained confident that contango would serve me right and turn a loser into a winner.  I am not rolling the position as I think the bull market has short legs at this point and will exhibit a lot of volatility in the short term.  Instead, I’m using the cash to buy more fixed income.

I bought 515 shares of the Nuveen Preferred Income Securities (JPS).  I have owned this before and found it to be a stable place to earn low risk income.  I paid 9.70 a share, putting 4,995.50 of capital at risk.  That is a half allocation and I’ll be waiting for more cash before buying the other half.  JPS pays 5.05 cents per month or 61 cents a year.  Against my cost basis, it yields 6.25% and adds 312 dollars to my annual passive income.  That income is now 10,572 and covers 48.94% of my budget.

Finally, the headline trade for the week.  With shares of MCD trading at 228.53, I bought the 240/250 strikes bear put spread for 8.828 per share (5 spreads.)  That puts 4,414 of capital at risk for about 47 days.  The trade enjoys 5.02% downside protection from a move in share price against me.  Should that not be breached, the full profit of 586 dollars will be earned at expiry.  That is good for 13.3% or 103% annualized.

Devour your prey raptors!

McDonald’s bear put spread with yield up to 103%

Never miss another opportunity to devour prey!

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