February 6th, 2010 at 4:33 pm
On 2/3/10, I sold 2 BMY Mar10 24 Puts for a net deposit of $108.46 in an IRA account. If Put to me my basis for these BMY shares would be 23.46.
I have 200 other BMY shares with Covered Calls on them at 27, expiring in Mar10. If these Puts are assigned to me they would average down my basis for BMY by about $1. Not sure if I’ll get them though, BMY is only .03 below my strike price and has been holding up pretty well over the past couple of weeks.
BMY pays a decent dividend of .32 per quarter which equates to about a 5.3% annualized yield. It is one of the stocks that I want to continue to acquire on weakness. I consider it part of my core holdings for the dividend and option premiums that I derive from it.
February 5th, 2010 at 12:33 pm
On 1/26/10, I sold 2 MO Feb10 20 Puts for a net deposit of $58.46 in an IRA account. If Put to me my basis for these MO shares would be 19.71.
I already own 200 shares of MO with existing Covered Calls at the 20 strike on them expiring in Jan11. My basis on those shares is 35.48, excluding dividends received. MO currently pays a .34 quarterly dividend which is about a 7% annual yield.
If I am put these new shares I would greatly average down the basis on my total MO holdings. I consider MO to be one of my core holdings and look to accumulate at these lower prices so will probably allow these shares to be Put to me.
February 5th, 2010 at 11:29 am
On 1/21/10, I bought 200 shares of PGF and sold 2 PGF Jun10 17 Covered Calls for a net deposit of $38.46 on the Calls. I purchased the stock at 16.84. My basis for these PGF shares is 16.65.
PGF is an ETF and this marks the first time that I have dealt in ETFs. I was directed to PGF by Jim Cramer in his latest book “Getting Back to Even”. PGF yields roughly 6.8% as of this writing and follows thirty preferred stocks in the financial industry. It has paid a monthly dividend since inception in 2006 which range from 9 to 12 cents.
In addition to the monthly dividend I can sell options on PGF, as indicated above. The option premium is not great but if I can replicated my current transaction I can gather the equivalent of another 2 or 3 months dividends. The ETF has not been very volatile since Aug09, hovering just above or below the $17 level. It is with that consistency in mind which caused me to sell the 17 strike. I may need to roll out the options to retain the stock in June or may let it be called away and repurchase it on pull back if it gets above 17 in June. I’ll decide closer to June expiration if necessary.
