On 1/21/10, I bought 200 shares of PGF and sold 2 PGF Jun10 17 Covered Calls for a net deposit of $38.46 on the Calls.  I purchased the stock at 16.84.  My basis for these PGF shares is 16.65.

PGF is an ETF and this marks the first time that I have dealt in ETFs.  I was directed to PGF by Jim Cramer in his latest book “Getting Back to Even”.  PGF yields roughly 6.8% as of this writing and follows thirty preferred stocks in the financial industry.  It has paid a monthly dividend since inception in 2006 which range from 9 to 12 cents.

In addition to the monthly dividend I can sell options on PGF, as indicated above.  The option premium is not great but if I can replicated my current transaction I can gather the equivalent of another 2 or 3 months dividends.  The ETF has not been very volatile since Aug09, hovering just above or below the $17 level.  It is with that consistency in mind which caused me to sell the 17 strike.  I may need to roll out the options to retain the stock in June or may let it be called away and repurchase it on pull back if it gets above 17 in June.  I’ll decide closer to June expiration if necessary.

On 12/24/09, 4 NLY Jan10 17.50 Covered Calls were exercised and my 400 shares were called away from an IRA account.  My basis for these NLY shares was 11.41, excluding dividends received, giving me a profit of $2416 after commissions.

NLY went ex-dividend on 12/24/09 and I should have known it and rolled it out to keep it from being called away.  NLY pays a 16%+ dividend at it current price of 17.35.  At the last dividend payment I was receiving 24.19% on my basis.  NLY just raised its dividend to .75 from .69 making the returns even greater.

As I said, I should have been paying closer attention and rolled my Jan10 Calls out to protect the stock.  Since I didn’t I decided to just buy the shares again which I did on the next trading day, 12/28/09.  I then sold 4 NLY Feb10 19 Covered Calls for a net deposit of $58.98.  My basis for these new NLY shares is now 17.65.