I’ve been a little nervous lately about how far and fast the market was advancing.  I had several Covered Calls that were in the money. Yesterday I decided to Buy to Close some of them with the idea that they would continue higher and I could roll them out at a higher strike price in a few days.  I did this knowing that it would probably cost me in the short term but with the belief that I would benefit in the longer term.  These transactions cost me a total of $2967.44 and raised my basis for each of the underlying stocks.  I still have BRCD and S May09 Covered Calls that are in the money.  I will continue to monitor them and roll them out if necessary prior to options expiration.   Here are the summarized transactions:

On 3/23/09, I sold 2 ACAS May09 2.50 Covered Calls for a net deposit of $20.50 in an IRA account.  My basis for these ACAS shares is now 22.02, excluding dividends received.

Just like AA, I may have sold these Covered Calls either too early or too low.  It looks as if ACAS may exceed the 2.50 strike price at the current rate.  I would guess that the government programs are beginning to work with the financial companies.  ACAS is in the Investment Services industry of the Financial sector.

I originally acquired ACAS for the great dividend which, of course, they suspended shortly thereafter.  I had hoped to continue to hold on to ACAS, selling Covered Calls, while waiting for the dividends to return.  At this rate, I may need to roll these options out and hopefully up before they expire in May and I am called away.

On 2/24/09, I sold 2 ACAS Mar09 2.50 Covered Calls for a net deposit of $10.50 in an IRA account.  My basis for these ACAS shares is now 22.12.

ACAS had been a great dividend payer, paying a dividend each quarter since its IPO in 1997, but last November it stopped, at least temporarily, paying a dividend.  Its Investor Relations page of its web site has, in part, the following statement:

“American Capital has paid or declared $29.25 in dividends per share since our IPO in August 1997. As announced on November 10, 2008, American Capital has revised its dividend policy to more proactively manage its capital base in the current market. No further dividends will be paid for the remainder of 2008 and American Capital will evaluate the declaration of its quarterly dividend after financial results are determined each quarter. American Capital intends to declare by June 15, 2009 and pay by September 30, 2009 $300MM of its 2008 remaining rollover taxable income in order to meet its RIC requirement and avoid any income tax liability.”

Thus, the price of the stock is waaay down from where it had been.  There remains hope that the dividends will resume and something will apparently be paid by the end of September, 2009.

In the meantime, I intend to hang onto the stock and collect option premium as I can.  I certainly don’t want it called away though.