Today I sold 2 KFT Dec09 30 Covered Calls for a net deposit of $50.49 in an IRA account.  My basis for these KFT shares is now $29.61, excluding dividends received.

KFT is currently paying a .29 quarterly dividend for about a 4.47%  annualized return with the current price of 25.67 as I write this.  My basis is just a little higher but my dividend yield (without actually calculating it) should still be above 4%.  The option premium makes my total return higher.

I am having to go out farther than I like for KFT because I want to sell a strike price above my basis, just in case it gets called away early.  I am able to do this with more of my stocks as I have reduced my basis in them by the selling of Covered Calls.

KFT has been trending up since mid Mar09 but began a pull back early in Jun09.  It’s too early to really tell but it appears that KFT may be making a base at this level as it seems to be floating around just above the $25 level.