Market Neutral Trades With Yields Up To 123%

It was a busy Monday.

music selection: “Don’t Forget Me (When I’m Gone)” — Glass Tiger

weigh-in:209.0 n/c – I’m happy to “break even” during the eating holidays.

First a little housekeeping. Bull Call Spreads in BAH and DIS expired over the weekend for their maximum profit of 22% and 34% annualized, respectively. Shares of ON and MO were called away, raising funds. Covered calls in SXC and IP expired out of the money.I harvested capital gains in a synthetic long position in ROKU at the 55 strikes.That cleared 16,909 in profit and consumes the remainder of my carry over capital losses from the 2018 tax year.

I finally got a fill on a covered call for Cameco (CCJ). I sold CCJ200619C00011000 for 28 cents a share. The trade will be in force for 180 days and yields an expected 5.16% annualized. The intent here is to exit this position gracefully over time to continue raising cash. With my old CC in IP expired, I sold IP200117C00047500 for more income and the intent of exiting to raise cash. I collected 38 cents per share. The trade will be in force for 26 days and yields 11.23% annualized. I also sold a new covered call in SXC by selling SXC200320C00007500 for 15 cents a share. The trade will be in force for 89 days and yields an expected 8.20% annualized.

This week, I’m going long a gaming (casinos) company and shorting a mall-based retailer. My bear put spread is in Abercrombie and Fitch (ANF). They are dependent on shopping mall traffic and all reports is Christmas mall traffic is down year over year. I expect them to struggle or at least not knock it out of the park and zoom past my margin of safety by being in the money. I opened the 21FEB2020 expiry spread with 19 and 20 strikes. My net debit is 85 cents per share. The trade will be in force for about 61 days and enjoys 13.98% protection against a gain in the share price. Otherwise, the spread will earn about 18% or 106% annualized.

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