BXSL at a Discount

Blackstone Secured Lending (BXSL) is a business development company that keeps things simple and sturdy: it mostly lends at the very top of the capital stack (about 98% first-lien loans to larger, sponsor-backed companies), runs with low fees and a low cost of debt, and keeps credit issues minimal (non-accruals around 0.1% of fair value). It also funds the majority of its assets with unsecured borrowings and carries solid investment-grade ratings—ingredients that tend to make earnings and net asset value more resilient through cycles (see the summaries and charts on pp. 2 and 14).

For income seekers, the draw is a straightforward, well-covered regular dividend (recently $0.77 per quarter) that management aims to keep stable rather than chase short-term bumps. BXSL entered this period with a spillover income cushion and has outlined multiple levers (like modestly increasing leverage within a conservative target range)to help offset lower base rates when (?) they arrive.

Net-net: it’s a clean, defense-first way to collect dependable income over time without needing to micromanage the position.

Now we can make this even better.

Pair BXSL as a (potential) holding with a conservative options overlay: sell cash-secured puts at the $27.50 strike for the Oct 17 expiry. If BXSL stays above $27.50, the put expires worthless and you keep the premium … this is pure income for being willing to buy. If it dips and you’re assigned, your effective entry becomes $27.50 minus the premium you collected, i.e., you get paid to buy lower. The math is straightforward: annualized return ≈ (premium ÷ cash secured) × (365 ÷ days to expiry). Using a realistic one-month example, if the premium lands around $0.35–$0.55, return on collateral is roughly 1.3%–2.0% for ~30 days … annualized that’s about 16%–24% (before tax/fees).

Benefits: immediate cash flow, a built-in discount if assigned, and alignment with a quality, income-first BDC you’re happy to own anyway. Size positions cash-secured (not on margin), be prepared to hold the shares at your net cost, and roll only if your thesis or market conditions change.

Today, I sold some puts, just like this. I missed out on quite a bit of premium (compared to if I had purchased the other day), but I am still satisfied, capturing $0.70 premium per share.

I’m happy doing this and owning the shares below about $30 (as a long-term buy-and-hold investor), and I’ve been actively but slowly building my position in the last few weeks.