On 10/28/08 the E*Trade margin department BTC 2 Dec08 25 Puts and 6 Jan10 12.50 Puts to help satisfy an imbalance in my taxable account.  I am actually glad to get these off my back.  I keep thinking that GM is too big to allow to fail and that the Feds will do something to prevent it, if for no other reason to preserve the millions of jobs that would be lost.  However, in the meantime, I don’t need to own any more GM, especially at those strike prices.

On 9/26/08, I BTC 6 GM Dec08 12.50 Puts and STO 6 GM Jan10 12.50 Puts for a net deposit of $1174.99 in my taxable account.  My basis for these GM shares if assigned would now be 7.89.

With GM at 9.14 as of this writing if it is assigned to me right now I could sell it and still make a profit.  Actually, I would like for that to happen.

The reason for this trade, of course, is to raise some additional cash in my taxable account and to attempt to defer the potential assignment of the stock.  There’s no guarantee on the deferral though.  At least if it does happen I have a little more latitude as to whether I keep it and sell Covered Calls or just sell the stock.

This morning I rolled out and up 12 GM Sep08 12.50 Covered Calls.  I BTC 12 GM Sep08 12.50 Calls and STO 12 GM Dec08 15 Calls for a net deposit of $406.02 in two IRA accounts.  My basis for these GM shares is now 13.09 and 19.51.

I originally acquired these GM shares for the dividend of .25 per quarter and for the option premiums.  Since then GM has “suspended” its dividend which leaves only the option premiums.  My return on the option roll outs is not that great here, being around 5% annualized.  However, I have increased the strike price by 2.50 or $1500 per account.  This also set me up to either roll the calls out (and possibly up) again or, if they expire, to sell new ones for an even greater return.

GM seems to be moving up lately because of potential Federal loans to auto makers (including Ford, Chrysler, and even foreign auto makers if they manufacture here).  That would certainly help some of their cash flow problems and indicates that the Feds do not intend to let them fail.