Yesterday, I BTC 2 Jul09 60 Covered Calls and STO 2 Jan10 65 Covered Calls for a net cost of $63.10 in an IRA account.  My basis for these shares is now 55.18.

These trades give me a return on my basis of about 17.8% simple which equates to about 34.2% annualized.

I pondered this move for some time before I actually placed the orders.  I could have let AMZN be called away at 60 and made a profit of a little of $1000.

I also considered two other roll out options.  The first was to just roll out to the Aug09 60 which would have given me a simple return on my basis of about 10% or about 86.3% annualized.  The short term produces the high annualized return.

The second was to sell more time by selling the Oct09 60 which would have given me a simple return on my basis of about 12.5% or about 46.3% annualized.

Both of the last two options would have produced a positive cash flow and I think I could have continue to roll out at the 60 strike price for several months.  In the end, I decided to roll up the strike price by $5 for a cost of .31 because it produces the greatest profit dollars and simple return percentage even though it cost me a little now and produced the lowest annualized return.  With any luck , I will continue to own AMZN in Jan09 and and be able to make a trade that actually produces positive cash flow.

On Tuesday, 2/3/09, I BTC 2 AMZN Apr09 55 Covered Calls and STO 2 AMZN Jul09 60 Covered Calls for a net deposit of $61.00 in an IRA account.  My basis for these AMZN shares is now 54.87.

AMZN gaped up at the end of January and has continued to move up since then.  I originally thought that the Apr09 55 Calls would probably expire worthless because Apr is past the prime Christmas selling season.  Turns out that I was wrong.  I’m not sure why the sudden upturn but I do see that analyst sentiment as reported on YHOO Finance has a slight leaning above neutral with a median price target of 61.50.

I rolled these calls out and up at this time because I wanted to make sure I was not called away early.  Even though my strike price is still below the current market price it still netted me additional cash flow and increased my return if called away by an additional $5 in strike price.  More importantly, this transaction raised my strike price above my basis again.  I don’t get the chance to say that very often right now.

Yesterday I BTC 2 AMZN Dec08 50 Covered Calls and STO 2 AMZN Apr09 55 Covered Calls for a net deposit of $891.00 in an IRA account.  My basis for these AMZN calls is now 59.17.

Just a couple of days ago I wrote about selling the AMZN Dec08 50 Covered Calls and now just a week later I felt like I needed to BTC them and sell new Covered Calls at a higher strike price.  Then today, AMZN closed below my original Dec08 50 strike price.  Who knows what to think?  In any case, I feel better after rolling these calls out and up.  It doesn’t hurt that I gathered an additional $891 in the process.  This is traditionally the time of year when the AMZN price spikes due to the anticipated holiday shopping.  There is still a good chance that it will close above 50 by option expiration next week.  I expect that it will then begin to drift down again.  If not, I will just need to roll it out and possibly up again.