This morning I BTC 2 DSX Sep9 40 Puts and STO 2 DSX Dec09 40 Puts for a net deposit of $165.00 in my taxable account.  If assigned, I would now own DSX at 31.57.  DSX closed today at 27.94.

I would not mind owning DSX but used this opportunity to increase my cash position in my taxable account.   DSX pays a good dividend, which it has raised each quarter this year.  It declared its most recent quarterly dividend at .91 per share.  As you may know, I like dividend paying stocks, especially when I can get a good option premium along with it.  I do own 200 shares in one of my IRA accounts.

On 7/24/08, I sold 2 AA Sep08 40 Covered Calls for a net deposit of $74.50 in an IRA account.  My basis in these AA shares is now 28.88.

I originally acquired these shares at 37.50 so am looking for an additional 2.50 per share over my purchase price if these are called away.  AA also pays a small dividend of .17 per share per quarter for an annualized 2.17%.

I think of AA as part of my core holdings so do not really want to have it called away.  I just want to continue to sell out of the money covered calls and collect the quarterly dividends.  Eventually I will have all of my money out of it and the return will then be infinite.  I know you can hear the chipping sounds again.

On 7/24/08, I sold 2 PDS Dec08 30 Covered Calls for a net deposit of $30.50 in an IRA account.  My basis for these PDS shares is now 26.95.

One of the reasons that I acquired PDS (it was put to me actually) is because of the monthly dividend.  PDS pay .13 per share per month for a 7.25% annualized return.  I was disappointed in the small option premium I was able to secure this time and how far out the expiration month is.  However, I would rather take a little than nothing.  I also am a little impatient so do not want to wait and take the risk that a stock price will fall rather than rise in an attempt to get a higher premium.