Yesterday, Feb 23, 2010, I sold 4 NLY Jul10 19 Covered Calls for a net deposit of $90.94 in an IRA account.  My basis for these NLY shares is now 17.42, excluding dividends received.

I have been an owner of NLY shares for some time.  I had 400 shares called away in Dec09 at 17.50 when my basis was 11.41, excluding dividends received.  I quickly purchased an additional 400 shares at 17.80 and began to again reduce my basis by selling Covered Calls at the $19 strike price.  The current transaction is my second selling at that strike price.

NLY pays a very good dividend, .75 last quarter, which represents an annual yield of about 16.76%.  NLY has raised its dividend each of the prior 4 quarters.  There is of course no guarantee that the dividend will continue at that level.  In fact there is some discussion that the profitably of the company may reduce once the Fed begins to increase the interest rates.