November options trades: GMR and DDR
This past week was options expiration and only the third or fourth time this year I was assigned a short put option. I had ample time prior to expiration to close (buy back) the position at a profit, but elected to be put the shares and initiate a position in the stock (General Maritime) at a cost basis below the current market.
It’s a relatively small position, and I may decide to sell covered calls against it and/or sell additional put options against it at a lower strike if given the opportunity. The tanker sector has seen some upgrades recently, and with most tanker stocks still trading near their lows it could be interesting to see what develops in the months ahead.
Overall this is shaping up to be a light month for options trading activity. December’s looking like it could be on the light side too, but things really start to kick into high gear again in January when I have the first batch of many short 2010-dated put option positions expiring.
Options Expiration Results
General Maritime (GMR: 4.62 +4.52%, yld: 10.29%) – The November 7.5-strike puts I sold against GMR last September expired in-the-money (ITM) and I was put the stock for a net cost basis of about $6.83 per share.
New Positions
Developers Diversified Realty (DDR: 11.55 +1.76%, yld: 0.70%) – On 11/17/09 I sold some April 12.5-strike covered calls against my long position in this REIT:
This developer of retail and office properties underwent a near-death experience during the recent financial crisis and is now maneuvering to deleverage and eliminate its near-term debt maturities. The company made news recently when it successfully raised capital by issuing new commercial mortgage backed securities (CMBS).
The stock has been performing reasonably lately, which isn’t saying all that much considering it’s still down 70% from my ill-timed entry point last year. To add insult to injury, the dividend has been cut and is now being paid mostly in stock. While DDR may be a reasonable longer-term play at these levels, I have no further use for it and will shed no tears if it’s ultimately called away at a loss.
