I have been working against a margin call in my taxable (and margin) account for most of the month.  In October I thought this was behind me but, as usual lately, I was wrong.  I have been using my weekly IRA redemption to increase the cash in the margin account but that wasn’t happening fast enough with the wild swings in the market.  So today the E*Trade margin department took action again.  This particular account is so demolished that I whatever they want to do is pretty much okay with me at this time.  They usually do what I would do anyway.  So…

Today I BTC 2 RIO Dec08 35 Puts at net cost of $5155.49.  That gives me a net loss of 23.47 per share.  Of course, I should have closed RIO out at least in Aug08 when RIO was about 30 but I was an optimist way too long.  I suspect that I was not alone.

Today I BTC 5 BRCD Jan09 10 Puts at a net cost of 3311.74.  That gives me a net loss of 6.19 per share.  Again, I should have closed BRCD out earlier, perhaps in Aug08 or again in Sep08 when it was just under 8.  Again, I was an optimist way too long and just did not believe that things would get so bad so fast.

After this I am still underwater in the account but can only do so much.  I suspect that there will be a bounce tomorrow since it is options expiration day.  I will be able to sell additional Covered Calls on the stocks that I still have in the account next week.

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.

On 7/21/08, I BTC 2 GM Sep08 25 Calls and STO 2 GM Dec08 25 Calls for a net deposit of $121.00 in my taxable account.

The Sep08 GM Puts may have turned out okay but I was feeling more than a little vulnerable with the potential assignments in my taxable account so wanted to generate some additional cash to help mitigate the problem if I start getting assigned.  I would now own these GM shares at 20.76 if assigned.

I am still underwater in 3 other stocks in my taxable account (DSX, LVLT and RIO) which I may look to roll out also.  All of these stock are up right now though.  As they move up I feel less vulnerable.  LVLT in particular is a stock I don’t really want to own though.  I would really be okay if I was assigned the other two but would still prefer not to be assigned if possible.

One more thought in GM.  Some of the incentive for me to own GM is now gone since GM suspended the dividend.  The option premiums are still okay but the total return is now less.