I think that all regular readers of this board recognize that I am a huge supporter of Yamana and have profited greatly from building and holding a large position in the stock over the past eight hers. Last summer I was fortunate enough to decide to buy an oversize position in the 2014 leap options at the $13 & $15 strike prices at what are now, very attractive prices.
As a result of this series of trades and the appreciation of my AUY core holdings, Yamana has grown to well over thirty percent of my portfolio... Great performance! However it is now time to lighten up a bit and trim this position down to a more reasonable 15% of the portfolio.
So while I consider Yamana to be a "strong buy" and my favorite gold stock, I need to divest some of it. and re-allocate myself to a slightly different risk profile of other gold stocks (NG), some more physical (CEF) and some dirty rotten fiat cash.
I am executing this strategy by selling covered calls that are at the money instead of performing an outright sale of the stock.
Today, I started selling front month calls that are in the money at the $20 strike price. With 8 days left to expiry I am capturing .60 (thats $600) per ten contracts. My realized price will be $20.60 if my shares are called away. (I usually sell calls at the strike above the money at high points so this represents a strategic shift creating a higher probability of getting the stock called away).
I will also be rolling the 2014, 13 & 15 leaps to an out of the money 2015 position and taking 100% of that profit off of the table over the next three months.
I do not post my trades very often but since I did post that I was buying the leaps and building my position, it would make sense to advise that I am trimming my position heading into the new year.