Option Assignment – IAMGold Corp

A closure in my portfolio — my covered call option that I wrote in June 2016 got called away closing my position in IAMGold Corp (IMG.TO). Its a company that I have held in my portfolio for a long time (approx 3 & 1/4 years) – through the depths of the gold & precious metals bear market. Now that the prices have recovered, I wanted to upgrade the quality of my gold mining┬ácompany holding. IAMGold is a decent company, but has its problems with some management issues. There are better companies out there and I decided to upgrade with the purchase of B2Gold Corp (BTO.TO) last month.

Overall gains (including dividends and options premiums): 28%

4 thoughts on “Option Assignment – IAMGold Corp

  1. Safety says:

    Have you considered a senior piece of convertible credit on a much cheaper gold stock as opposed to common equity?

    For example, Gran Colombia Gold has a senior convertible (GCM.DB.V) that trades at 86 with a 6% monthly coupon that is convertible at US$0.13 vs the recent close of GCM.TO at C$0.13. This seems to offer income, security and lots of upside to GCM equity. The bonus is that GCM’s EV/EBITDA trades at less than 2x and no analysts have picked up coverage yet so the bonds could be a triple on their own.

    • Thanks for the pointer, Safety. Convertible credit is something that I do not understand and have never looked into it. Sounds interesting, but I am not competitive enough to take a wager in that field.


  2. Safety says:

    I think worth spending the time on. I’m sure you can appreciate that debt is higher in the capital structure than equity and you are getting all of the upside of the equity while getting paid to wait. BTO trades at something like 10x 2017E CFPS with $1500 gold and GCM trades at less than 1.5x at $1500 gold. One seems a lot riskier than the other in my opinion.

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