Yesterday 7/27/10, I sold 4 NLY Jan11 19 Calls for a net deposit of $122.96 in an IRA account.  My basis for these NLY shares is now 17.11, excluding dividends received.

I would prefer to have sold Calls with an earlier expiration date but I needed to go further out in order to get a reasonable premium for the $19 strike price which I think will allow these Calls to expire worthless in January.  As you can surmise, I would prefer for NLY to not be called away.  I sort of think of NLY as part of my core holding because of its good return (14.93% on my basis when last received on 4/28/10) and for the extra income I can receive from selling Covered Calls.

This option transaction provides me a simple return of about 1.76% which translates to an annualize return of about 3.62%.  I sort of think of NLY as part of my core holding because of its good return (14.93% on my basis when last received on 4/28/10) and for the extra income I can receive from selling Covered Calls.  The combination provides me with a pretty good return on my basis.