On Wednesday, 4/7/10, I sold 4 PDS Sep10 10 Covered Calls for a net deposit of $86.94 in an IRA account.  My basis for these PDS shares is now 23.98, excluding dividends received.

I’ve been sitting on these PDS shares since my last Calls expired worthless in Sep08.  I cannot even remember why I have waited so long to begin selling new Calls on PDS.  As I look at a chart of the stock I can only guess that it was so low that I just didn’t want to sell new options on it.

PDS last paid a dividend in Feb09.  It was .03 per share down from the previous .13 per share.  It was the dividend that first attracted me to PDS because it was a monthly dividend.  PDS is based in Canada.  I don’t expect that PDS will be paying monthly dividends again when and if it resumes paying them.  PDS is a Canadian Trust and the tax law changes in Canada are causing many trusts to change to standard corporations.

So, what do I do with PDS?  If it does not resume paying a dividend it will not fit my general investment goals.  On the other hand, you know how I hate to have a stock called away below my basis.  I suspect that I will continue to hold and sell or roll out Covered Calls for as long as I can do so with a positive cash flow.

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.

This week, I received the following dividends in various accounts for a total of $30.63:

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.  Note that PDS pays a monthly dividend.

Today I sold 4 BP Jan09 50 Covered Calls for a net deposit of $429.00 in an IRA account.  My basis for these BP shares is now 63.71 without consideration for dividends received.

I really don’t want BP called away from me.  It pays a good dividend of .84 per quarter which translates to about 6.85% annually.  BP also tends to have a decent option premium.  With all that said, I took a chance today with BP trading over 49 that it would not reach my strike price of 50 in the next 8 days prior to these options expiring.  If it does, I will roll the options out and up to protect them while earning additional option premium.

I should say again that I am long term bullish on energy in general and oil in particular.  In addition to these shares I own another 100 BP shares along with shares of CCJ (uranium), VLO (refining), PDS (oil well services), and MEE (coal).  I just don’t think there will be enough energy to go around in the future which makes energy related stocks very attractive to me.