Options Trades: GRUB, ABBV, SWKS, EPD, VNOM

Three positions expired over the weekend and two more were opened.

I had a diagonal call open on GrubHub (GRUB) with the short leg about 20% out of the money. The company surprised with a blowout quarter that sent shares far above my strike price. Shares were called away and assigned short at 130. I exercised my long call at 32.5. The long call was purchased for 71.60 and I collected premiums of multiple short calls of 1.10, 2.15, 0.50, and 1.75. Total profit was thus 5,930 over 179 days on 14,320 put at risk or 84.44% annualized. I’m moving on from this great trade and seeking other profit making opportunities.

My short leg of a diagonal call in SkyWorks (SWKS) expired out of the money over the weekend. I wrote a new short call SWKS181012C00100000 for 30 cents per share. Against my cost basis of 63.70 per share this trade has an expected yield of 4.41% over 39 days. I retain access to upside on share appreciation above 50.

A short put in AbbVie (ABBV) expired out of the money over the weekend. I rolled by selling ABBV180907P00094000 for 3.60 per share. The trade will be in force for 39 days and yields an expected 35.84% annualized.

A new position this week is in Viper Energy Partners LP (VNOM). This is a best in class oil and gas MLP that is making an aggressive move into the “Austin Chalk”. Distributions have shown strong growth in the past. I am opening a buy/write position by buying shares at 39.28 and selling VNOM180921C00042000 for 30 cents a share.The trade yields an expected 12.60% annualized over 22 days while enjoying 0.76% downside protection. I also remain eligible to collect on the underlying distribution of 6.11%. In addition there is room for up to 2.94 in capital gains if shares rise.

Another new position is a second buy/write trade in Enterprise Product Partners LP (EPD). This is a pipeline MLP with a solid balance sheet and strong past distribution growth. Management is committed to organic growth without excessive debt. I purchased shares at 28.76 and sold EPD181019C00030000 for 16 cents a share. The trade yields an expected 3.98% annualized over 51 days while enjoying 3.98% downside protection. I remain eligible to collect the underlying distribution of 6.00%. Also there is room for 1.24 in capital gains if shares rise.

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