This morning I BTC 7 AUY May08 15 Covered Calls and STO 7 AUY Jun08 15 Covered Calls for a net deposit of $461.53 in 3 IRA accounts.

I own these AUY shares from 7.76 to 10.64 so would have been okay if they were called away in May08 at 15 but as I said in my previous post on BVF I like selling Covered Calls on stocks I already own even if I need to roll them out occasionally.  In this case, the annualized return of the additional premium is quite nice at more than 54% on shares I own at $10.64 and even greater on the others.  Wouldn’t it be nice if I actually earn my entire purchase price in premiums resulting in a basis of zero (or below zero) on this stock.  My annualized premium percentage would then be infinite. 

This morning I BTC 6 BVF May08 12.50 Covered Calls and STO 6 BVF Oct08 15 Covered Calls in 2 IRA accounts for a net deposit of $79.02.

This is not a great return on the rolling out of the Calls but it represents an increase of $3000 at the higher strike price.  i own 400 of these BVF shares at $14.05 and the other 200 at $17.74 after the current roll out.

BVF has been moving up since mid April.  I think they took some hits earlier on reported accounting problems and are starting to recover.  Their 1st quarter results were down year over year but they announced a 14 million share buy back program.  14 millions shares is almost 10% of BVF float.  Of course, it remains to be seen if they will actually buy back that many shares.  If they do it will certainly cause the stock rise, all else being equal.

I would like to keep BVF and sell Covered Calls on it as long as possible.  It pays a good dividend at just under 12% at the current price (12.63 as I write this).  I have also come to realize that I like owning good dividend paying stocks and selling Covered Calls on them, including rolling them out if possible and necessary to capture the additional time premium.  It is slightly less stressful than selling Puts and seem to generally requires less monitoring.

I don’t have anything specific to say about the following May08 Calls so I will just list them for the record.

• 2 BAC 40 for 86.50 in an IRA account
• 6 BVF 12.50 for 69.50 in an IRA account
• 2 NYX 70 for 388.50 in an IRA account
• 1 MNST 25 for 96.25 in an IRA account

I generally like to sell calls for the front month because it turns the money faster and makes it easier for me to monitor and roll out or out and up if necessary.