This morning I rolled out and up 12 GM Sep08 12.50 Covered Calls.  I BTC 12 GM Sep08 12.50 Calls and STO 12 GM Dec08 15 Calls for a net deposit of $406.02 in two IRA accounts.  My basis for these GM shares is now 13.09 and 19.51.

I originally acquired these GM shares for the dividend of .25 per quarter and for the option premiums.  Since then GM has “suspended” its dividend which leaves only the option premiums.  My return on the option roll outs is not that great here, being around 5% annualized.  However, I have increased the strike price by 2.50 or $1500 per account.  This also set me up to either roll the calls out (and possibly up) again or, if they expire, to sell new ones for an even greater return.

GM seems to be moving up lately because of potential Federal loans to auto makers (including Ford, Chrysler, and even foreign auto makers if they manufacture here).  That would certainly help some of their cash flow problems and indicates that the Feds do not intend to let them fail.