July 28th, 2008 at 12:53 pm
On Friday (7/25/08), I sold 53 FBR Jan09 2.50 Covered Calls for a net deposit of $1245.25 in my taxable account and 4 IRA accounts. My basis for FBR ranges from 8.40 to 9.26 per share including option premiums but excluding dividends received.
As you can see, I am way underwater on FBR. It is shaping up to be my biggest loss ever.
My last FBR calls expired in Jun08. I held off selling new calls to now because I wanted to wait after the conference call last week. In the prior conference call FBR executives said they would be evaluating restarting the dividends during the quarter just ended. Since there was no dividend announcement I decided to go ahead and sell the covered calls. Right now the only next covered call available is for Jan10. I presume the Jan09 calls will expire worthless but will need to see how the financial winds are blowing before I decide what to do after that.
July 28th, 2008 at 12:43 pm
Last Friday (7/25/08), I BTC 2 RIO Sep08 25 Puts and STO 2 RIO Dec08 35 Puts for a net deposit of $101.01 in my taxable account. If put to me my basis on these RIO shares would now be 32.69.
I tend to like RIO as a basic materials play but this is my taxable account which I am trying to “heal” by reducing my potential liabilities (stocks I may need to purchase). As noted previously, I feel a little over extended in this account. Actually, I thought I was okay until about two months ago when stock values started falling again. If stocks broadly rally again I will feel comfortable again.
July 28th, 2008 at 12:36 pm
On 7/24/08, I sold 2 MO Aug08 22 Covered Calls for a net deposit of $36.50 in an IRA account. My basis for MO is now $37.49.
MO has confused me of late because of the KFT and PM spin-offs. I am not really sure what my basis is but am using the stated value as a working number. I should really know my basis but because this is an IRA account I don’t need to know for tax purposes. I think my basis is probably too high.
MO is currently paying a .29 per share per quarter dividend for an annualized 5.57%. I am slightlytempted to sell some 20 Puts on MO. If put to me they would average down my basis in what I think is still a pretty good stock. However, I think the FNM and FRE puts I sold last week are enough for now. I am holding onto amost $34k in cash in this IRA account to provide me some flexibility if need be. Although, it may need be that I need to sell those MO 20 Puts. I guess I’ll just watch MO for a little little longer.
