Market Shadows Made a Rare Pre-Market Trade This Morning
I almost never feel compelled to trade before the official 9:30 AM opening of the NYSE. I spotted a value proposition that looked so good today, due to the overall market weakness, that I bought for both Market Shadows and my personal account pre-opening today.
Market Shadows Virtual Value Portfolio bought 400 units (similar to shares) of Boardwalk Pipeline Partners L.P. (BWP) this morning @ $12.24 for a net outlay of $4896. The purchase was paid for from our cash reserves.
Our Virtual Put Writing Portfolio also played with BWP, shorting 8 contracts of the BWP Sep. 20, 2014, $12.50 puts @ $1.75 each. We collected $1,400 for standing ready to buy 800 units in the future, if exercised, at a net cost of $10.75 ($12.50 strike price – $1.75 put premium). In my own account I also sold some Sep. $15 puts @ $3.42 for a net ‘if exercised’ price of $11.58 per unit.
I will write about my reasoning concerning these trades when time permits, but I wanted to alert our readers to the actions we took ASAP.
Please note that BWP is a master limited partnership (MLP). Owning these means adding some tax complexity due to the legal status of MLPs.
A limited amount of MLP units can be held in tax-sheltered accounts without IRS problems but you need to be careful when dealing with larger amounts of money in IRAs due to specific tax rules regarding MLPs in retirement accounts.
