Yesterday, 6/22/10, I STO 2 KFT Aug10 31 Covered Calls for a net deposit of $62.46 in an IRA account.  My basis for these KFT shares is now 28.86, excluding dividends received.

S&P has a 12 month target of $30 for KFT.  That was pretty brave of them as KFT was selling at $30 when they formed their opinion on June 19.  KFT has had a 52 week high of 31.09 and a low of 24.16.  It seems to have a lot of resistance near 31.  Actually, my last two Calls were written at 30 and expired worthless in Dec09 and Jun10, although the Jun10 expiration was a squeaker.  Here is what I wrote yesterday regarding that:

I had expected that my KFT Jun 30 would result in my KFT shares being called away because KFT closed Friday at 30.01.  I had understood that if the stock was 1 cent in the money it would automatically be called.  After about an hour on the phone or waiting for a call back from E*Trade it turns out that whoever was on the other side of the deal had entered a do not execute order which arbitrarily allowed me to keep the stock.  I would have been happy either way.  If I had been called away I would have sold July or August 30 Puts on KFT.  Since I still own it, I will now receive the dividend to be paid early in July and will also sell new Covered Calls on it.

So, now I have written new Covered Calls and at a one dollar higher strike and at a nearer expiration month than I have been able to do for awhile.  It helps that I am in the money on the stock and am okay if it gets called away at this strike.  As I wrote yesterday, I would probably sell Puts on KFT if it gets called away in August.

I originally acquired KFT as a spin off from MO back in 2007.  Since 2009 then I have received $348 in total dividends or $1.74 per share in total.  My records do not currently reflect any dividends I may have received prior to 2009.  The dividends are about a 4% annualized yield on my option reduced basis.  Couple the dividends with the option premiums I collect and I am happy to continue owning KFT.