I sold 4 FNM Mar09 2.50 Covered Calls on 10/22/08 for a net deposit of $37.00 in an IRA account.  My basis for these FNM shares is now 8.72 excluding dividends received.

FNM is no longer paying any dividends since the Feds stepped in and established a conservator-ship.  I am actually confused as to what exactly that means to me as a stock holder.  The same with FRE.  Both stocks continue to trade and I continue to be able to sell Covered Calls on them.  I guess I’ll continue to do so until I can (if I can) recoup my investment.

I sold 4 FRE Jan09 3 Covered Calls on 10/20/08 for a net deposit of $29.00 in an IRA account.  My basis on these FRE shares is now 7.76.

Since the Feds came in and became the conservator for FRE they are no longer paying a dividend.  My only interest in FRE now is to get back to even and get out.  I could get out now but since this is an IRA account I cannot use the losses so have decided to continue to work it off with covered calls for as long as I can.  Besides, I have enough losses in my taxable account to last me for a life time. 

On 8/18/08 I STO 4 FRE Sep08 6 Covered Calls for a net deposit of $189.00 in an IRA account.  My basis for this lot of FRE shares is now 7.83.

200 of these FRE shares were put to me as a result of the Aug08 option expiration.  I purchased 200 of the FRE shares late in July and sold Covered Calls on them then.  So now I have 400 FRE shares in this IRA account.

My thoughts about FRE are much like those I have for FNM which I just wrote about.  FRE has not cut its dividend but I suspect that it is just a matter of time.  If not, then so much the better.

As with FNM, I will continue to hold and sell Covered Calls on FRE while I wait to see what develops.  This activity is also a gamble.  On a side note, I tell myself that I should not do these kind of trades but sometimes it seems I just cannot help myself.  It adds an element of excitement to the process.