Yesterday 7/26/10, I sold 2 MEE Jan11 40 Calls for a net deposit of $340.46 an IRA account.  My basis for these MEE shares is now 29.57, excluding dividends received.

This trade provides a 5.44% simple yield and an annualized 11.14% yield on my basis.  This return is greater than my average ROI which currently runs around 6.82%.  I also raised my strike price by $5 over the Call contract that expired in July.  I went farther out on these contracts in order to get the higher strike price and a nice premium.  MEE is down about $1.77 as of this writing to 29.96 but I am also conscious that it was up around $55 as recently as last April.

MEE pays a small dividend of 6 cents per quarter which translates to an annualized return of .77% on my basis of $31.27 at the last payout.  As I continue to decrease my basis the return will increase but it will be sometime before it approaches my target threshold of 4%.  Even so, I continue to hold MEE for the combined dividends and option premiums.