On Wednesday, 9/23/09, I BTC 6 ALSK Oct09 7.50 Covered Calls and STO 6 ALSK Apr10 10 Covered Calls for a net cost of 749.04 in two IRA accounts.  That was 4 contracts in one account and 2 contracts in the other account.  My basis for these ALSK shares is now 13.50 and 15.51 respectively, excluding dividends received.

Although my new strike price is above the current share price I am not convinced that I won’t need to roll these contracts out again.  ALSK is steadily recovering from the depths of March when it got as low as 4.64.  For the past 2 years and before the financial troubles a year ago ALSK was trading comfortably between 10 and 12 with what I think to be an all time high of around 15 (when I bought some of these shares of course).  I suspect that ALSK will again trade comfortably in the 10 to 12 range again.

I like ALSK for its dividend (about 7% on my basis and over 9% on current price) but am not happy with its option premiums.  There is a pretty wide spread between the bid and ask which makes it difficult to roll out and even more difficult to roll up except at a current cash flow loss.  Even so, I was able to increase my strike price by 2.50 per share at a cost of of about 1.25 per share.  That’s a longer term gain than my previous situation if I am called away.  My concern for option premiums goes away if (when?) I can once again sell at a strike price above my basis.