Many of the stocks that I own and write Covered Calls upon also pay dividends.  Dividends occur on a regular basis and add significantly to my annual investment income.  Year to date I have received a total of $3,305.23 in dividends in my various accounts for 2010.  My year to date (through June) average monthly dividends received is currently $550.87.  These dividends represent 24.99% of my monthly investment cash flow and 1.82% return on my current basis value.

During June, I received notice of the following dividends paid in various accounts for a total of $367.04:

Please notice that PGF is an ETF and pays dividends monthly.  The annualized dividend yield for PGF is based upon the simple and false assumption that it will pay the same dividend each month for the next 12 months.  The actual annualized dividend yield may be more or less than illustrated here.

I use my basis per share to determine the simple and annualized percentage return because I feel that it gives me a better representation of the value of the dividends as they relate to my portfolio.  My basis may be above or below the market price which causes my return to be lower or higher than published yields for a stock.  I calculate my basis per share as my acquisition price less any option premiums received on those shares.  I do not use dividends to reduce my basis.

Many of the stocks that I own and write Covered Calls upon also pay dividends.  Dividends happen on a regular basis and add significantly to my annual investment income.  Year to date I have received a total of $2,297.63 in dividends in my various accounts for 2010.

I received notice of the following dividends paid in various IRA accounts for a total of $232.72:

Please notice that PGF is an ETF and pays dividends monthly.  The annualized dividend yield for PGF is based upon the simple and false assumption that it will pay the same dividend each month for the next 12 months.  The actual annualized dividend yield may be more or less than illustrated here.

I use my basis per share, excluding dividends, to determine the simple and annualized percentage return because I feel that it gives me a better representation of the value of the dividends as they relate to my portfolio.  My basis may be above or below the market price which causes my return to be lower or higher than published yields for a stock.

Yesterday, 4/12/10, I BTC 6 NYX Apr10 30 Covered Calls and STO 6 NYX Sep10 31 Covered Calls for a net deposit of $418.83 in an IRA account.  My basis for these NYX shares is now 67.46, excluding dividends received.

These transactions reduced my basis by .69 per share and increased my strike price by $1 or potentially an additional $600 if the stock should be called away.

S&P has a 12 month target of $32 for NYX.  Even so, I sold the Apr10 Covered Calls just about 3 weeks ago (3/23/10) thinking that the $30 strike would probably be a safe level allowing the Calls to expire worthless.  It has been good for a few months now. 

Here is what I wrote after selling the Apr10 Covered Calls:

“I have sold NYX Covered Calls at the $30 strike on 5 prior occasions since Jul09.  They have expired worthless each time.  NYX seems to have a hard time getting above, or staying above, $30.  I sold the current Calls only one month out because I am a little nervous about where it is going and did not want to be exposed very long to that strike.”

As it turns out my concern was apparently justified.  There are still 4 days until April options expire but it currently looks like NYX will be above $30 on Friday.

Even though I am well underwater on NYX I rather like it.  The stock has a .30 quarterly dividend which equals about 3.75% at current price.  My return on basis is lower of course at about 1.76%.  On the plus side my return on basis continues to increase as the basis falls as a result of option premiums.