Today, I BTC 2 DIVX Dec08 10 Covered Calls and sold 200 DIVX shares for a net deposit of $996.51 in my taxable account.  My basis for these DIVX shares was 20.34.

Another losing transaction but necessary to help raise cash in my taxable account.  DIVX does not pay a dividend and the option premium is not great but I would have continued to hold and sell Covered Calls except for the continuing deterioration of the market and the resulting margin calls.   See my posts from earlier today for additional comments about why I am raising calls in this account.

On Wednesday, 9/24/08, I sold the following Covered Calls for a net deposit of $172.50 in my taxable account and various IRA accounts.

8 DIVX Dec08 10.00 – My basis for these DIVX shares ranges from 15.99 to 20.64.  I am a little concerned that DIVX may reach the strike price by December expiration because tech stocks tend to go up during the 3rd and 4th quarters.  Maybe the general economy will prevent that this year.  However, since I am still underwater on DIVX I will roll these out if necessary.  I intend to continue selling calls on DIVX until I can get it sold without taking a loss.

2 PDS Jan09 22.50 – My basis for these PDS shares is 21.45.  PDS is a good (monthly) dividend payer and occasionally has good option premiums.  I sold the Jan09 Calls because I don’t really want it called away unless I can take a profit on them.  It is my intent to hold PDS to collect the dividends and option premiums as part of my core holdings.  I will roll these calls out if necessary.  I own another 200 shares in this same IRA account.

I STO 2 DIVX Sep08 10 Calls for a net deposit of $20.50 in my taxable account.  My basis for these DIVX shares is now 20.49.

DIVX does not pay dividends so it does not meet my current investment philosophy.  I will continue to chip away at my basis until I can get there DIVX shares called away at a profit.  Some would say that I should sell and move on to better stocks.  Maybe, but I take some solace in knowing that the 20.50 I received still represents an 8.52% annualized return on my current basis and 20.19% annualized return on the current value of the stock.  I would need to get returns that exceed the 20.19% in order to have a better return if I sold DIVX at its current price of 8.69.  Also, as my basis is reduced the annualized return on the basis tends to increase each month, assuming that I can continue to gather similar option premiums.