Portfolio Update: Annaly Capital Management Buy/Write With Yield Up To 12.59%

I deployed some cash.

I have been raising cash and should have another 37,000 in the main trading account Monday. I went ahead and deployed about 10k into a dividend stock. I chose Annaly Capital Management (NLY).  This is not a growth name and is purely a dividend play.  The underlying yields 9.89%. There is also an opportunity to juice returns by selling covered calls.

I bought 1,100 shares at 8.91 and sold 11 calls at the 9 strike and 16APR2021 expiry. Odds of being called away are about even. That would result in an additional 9 cents earned as capital gains. Should shares not be called away, my annualized return on the calls would be 12.59%. If shares are called, I will write puts at 9 to try to get back in while producing income.  The ideal situation is NLY lingers in the high 8 dollar range for years and I earn the options yield plus collect the underlying distribution. That would be good for about 20% annualized return.  Warren Buffet level performance!

 music selection:  “Cuts You Up” — Peter Murphy

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