Covered Call CSX Corporation – Yields Up To 27.51%

A new buy/write on CSX Corporation (CSX).

music selection:  “Save Our Souls” — Motley Crue

weigh-in:  199.6 (0.4)

Hunter Harrison is a legend in railroad turnarounds. He is known for shaking things up, stepping on a lot of toes, and creating a lot of shareholder value.  He was well into this process with CSX Corporation (CSX) before suddenly dying. Shares took a little bit of a breather but they should be poised for a climb higher. The best part is management is out on an apology tour. They are keeping the best policies and raising profitability while wooing customers lost by the brash former CEO.

I opened a buy-write trade today. To do that, I purchased 100 shares of CSX at 69.66. I then sold CSX190322C00070000 for 1.76 a share. That trade will be in force for 40 days. It has a break even price of 67.90, providing 2.53% downside protection against a decline in shares. The expected yield is 23.05% on an annualized basis. If shares finish above 70, they will be called away resulting in 34 cents per share in short term capital gains, and raising the annualized return to 27.51%.

I feel pretty good about my chances here. It is a great return with low risk.

Devour your prey raptors!

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