Many of the stocks that I own and write Covered Calls upon also pay dividends.  Dividends happen on a regular basis and add significantly to my annual investment income.  Year to date I have received a total of $863.53 in dividends in my various accounts for 2010.

I have recently received notice of the following dividends paid in various IRA accounts for a total of $229.00:

I use my basis per share, excluding dividends, to determine the simple and annualized percentage return because I feel that it gives me a better representation of the value of the dividends as they relate to my portfolio.  My basis may be above or below the market price which causes my return to be lower or higher than published yields for a stock.

Many of the stocks that I own and write Covered Calls upon also pay dividends.  Dividends happen on a regular basis and add significantly to my annual investment income.

Today I was notified that yesterday, 10/21/09, I received the following dividends in two IRA accounts for a total of $129.00:

I use my basis per share, excluding dividends, to determine the simple and annualized percentage return because I feel that it gives me a better representation of the value of the dividends as they relate to my portfolio.  My basis may be above or below the market price which causes my return to be lower or higher than published yields for a stock.

My basis per share for these two sets of ALSK increased from the last dividend payout because I rolled Sep09 $7.50 Calls out and up to Apr10 Calls at the $10 strike.  The annual return is still quite respectable.

On Wednesday, 9/23/09, I BTC 6 ALSK Oct09 7.50 Covered Calls and STO 6 ALSK Apr10 10 Covered Calls for a net cost of 749.04 in two IRA accounts.  That was 4 contracts in one account and 2 contracts in the other account.  My basis for these ALSK shares is now 13.50 and 15.51 respectively, excluding dividends received.

Although my new strike price is above the current share price I am not convinced that I won’t need to roll these contracts out again.  ALSK is steadily recovering from the depths of March when it got as low as 4.64.  For the past 2 years and before the financial troubles a year ago ALSK was trading comfortably between 10 and 12 with what I think to be an all time high of around 15 (when I bought some of these shares of course).  I suspect that ALSK will again trade comfortably in the 10 to 12 range again.

I like ALSK for its dividend (about 7% on my basis and over 9% on current price) but am not happy with its option premiums.  There is a pretty wide spread between the bid and ask which makes it difficult to roll out and even more difficult to roll up except at a current cash flow loss.  Even so, I was able to increase my strike price by 2.50 per share at a cost of of about 1.25 per share.  That’s a longer term gain than my previous situation if I am called away.  My concern for option premiums goes away if (when?) I can once again sell at a strike price above my basis.