Given the stock market’s extreme volatility recently, I am going to hold off on opening new options positions for a little while and focus on the equity half of our portfolio. Since it is likely that the three put trades expiring next week will be assigned to us, I need to make room for them in what is already a crowded portfolio.

First, I am closing out several of the Master Limited Partnership (MLP) positions that we inherited from one of our predecessor publications. The MLP market was adversely impacted last year by a FERC ruling that reduced the tax benefit of MLPs. Combined with low oil prices, the MLP space has lost much of its appeal to investors which in turn lessens the magnitude of options premiums that can be written on them.

For that reason, we are closing out our long positions in CNX Midstream Partners (CNXM) and EQT Midstream Partners (EQM). Although not in the energy sector, we are also selling MLPs Cedar Fair (FUN) and Gaming and Leisure Properties (GLPI). Of course, you are free to continue to hang on to them and collect their sizable dividend payments.

Second, since our objective is to enhance income by writing options contracts against these positions I am closing out our preferred stock holdings since there is no liquid options market for them. Accordingly, we are selling Bank of America Preferred Series L (BAC-PL), Targa Resource Partners Preferred Series A (NGLS-PA), and Wells Fargo Preferred Series L (WFC-PL).

Again, you may elect to keep these positions in your portfolio if you like the steady income they provide. To be clear, we have no problem with any of these Preferred holdings other than they no longer lend themselves to the objectives of this service.

Next week, I’ll go over the three put options that will be expiring along with an update on my game plan for managing them as equity positions. My expectation is for the stock market to continue to seesaw between big up and down days through mid-February until most companies have released their Q4 and year-end reports.

Until then, we shall remain vigilant and make opportunistic trades if and when they become available to us.