New Covered Call- HGSI

Initial Transaction -- Bought 1000 shares of HGSI @ $2.96 = $2,960
Sold to Open 10 July 2.50's @ $.78 = $780

Return IF Stock is Called = 10.81%
Option Income (.78*1000) = $780
Stock Appreciation (2.5-2.96)*1000 = -$460
Net Profit = 780-460 = $320
Annualized Return IF Exercised (ARIE) = 218.55%
(320/2969)*(365/18 Days)

This was a gamble, I like how they have FDA approval, and there doesn't seem to be any really large news coming out between now and then... It's a small portion of my portfolio so we will see how well it works.

Current Covered Calls

Below is a list of the current CC's I have, after this post I will add a new post for each trade I initiate:

1) 6-26-09 (16 Trading Days to Expiration)

Initial Transaction -- Bought 200 shares of CAT @ $34.52 = $6,904
Sold to Open 2 July 35's @ $1.03 = $206

Return IF Stock is Called = 4.37%
Option Income (1.03*200) = $206
Stock Appreciation (35-34.52)*200 = $96
Net Profit = 206+96 = $302
Annualized Return IF Exercised (ARIE) = 75.95%
(302/6904)*(365/21 Days)

Premium = 2.98%
(96/6904)

This was OTM, so I could have a chance to hand onto the stock for the dividend in a couple months. If I get called, I am fine with a 4.37% return over 16 trading days.


Initial Transaction -- Bought 300 shares of UNG @ $14.18 = $4254
Sold to Open 3 July 14's @ $0.93 = $279

Return IF Stock is Called = 5.28%
Option Income ($0.93*300) = $279
Stock Appreciation (14.00-14.18)*300 = -$54
Net Profit = 279+(-54) = $225
Annualized Return IF Exercised (ARIE) = 104.18%
(255/4254)*(365/21 Days)

Premium = 6.55%
(96/6904)

This seemed like a safe play with UNG trading near its 52-week low and the premium allows for decent downside protection.

2) 6-25-09 (17 Trading Days to Expiration)

Initial Transaction -- Bought 200 Shares of FDO @ $28.99 = $5798
Sold to Open 2 July 30's $0.88 = $176

Return IF Stock is Called = 6.51%
Option Income ($0.88*200) = $176
Stock Appreciation (30.00-28.99)*200 = $202
Net Profit = 176+202 = $378
Annualized Return IF Exercised (ARIE) = 108.16%
(378/5798)*(365/22 Days)

Premium = 3.03%
(96/6904)

Family Dollar has a solid financial base and is a stock I want to own, so I decided to go a little further OTM with the Call. Normally I like to keep the options either ATM or ITM, but these last few seem to be good investments.

3) 6-24-09 (18 Trading Days to Expiration)

Bought 400 Shares of AA @ $10.39
Sold to Open 4 July 10's @ $0.95

Return IF Stock is Called = 5.39%
Option Income (0.95*400) = $380
Stock Appreciation (10-10.39)*400 = -$156
Net Profit = 380-156 = $224
Annualized Return IF Exercised (ARIE) = 85.53%
(244/4146)*(365/23 Days)

Premium = 9.14%

I have had good luck with AA over the last couple months, so I decided to initiate another position.

Bought 300 Shares of GE @ $11.95
Sold to Open 3 July 12's @ $0.55

Return IF Stock is Called = 5.02%
Option Income (0.55*300) = $165
Stock Appreciation (12-11.95)*300 = $15
Net Profit = 165+15 = $180
Annualized Return IF Exercised (ARIE) = 79.67%
(180/3585)*(365/23 Days)

Premium = 4.60%

This trade was a little riskier for my taste, but I decided it was a small portion of my portfolio and there wasn't really any major news coming out that would shake this company.

4) 6-23-09 (19 Trading Days to Expiration)

Bought 300 Shares of NOK @ $14.21
Sold to Open 3 July 15's @ $0.37

Return IF Stock is Called = 8.16%
Option Income (0.37*300) = $111
Stock Appreciation (15-14.21)*300 = $237
Net Profit = 111+237 = $348
Annualized Return IF Exercised (ARIE) = 124.15%
(348/4263)*(365/24 Days)

Premium = 2.60%

5) 6-19-09 (21 Trading Days to Expiration)

Bought 200 shares of HPQ @ $38.21
Sold to Open 2 August 40's @ $1.31

Return IF Stock is Called = 8.11%
Option Income (1.31*200) = $262
Stock Appreciation (40-38.21)*200 = $358
Net Profit = 262+358 = $620
Annualized Return IF Exercised (ARIE) = 50.19%
(620/7642)*(365/59 Days)

Premium = 3.42%

This is my longest position, I wanted to be able to hold this stock as an investment, and capture the dividends that will be coming down the pipeline. So I went out to August because the premium for another month out was 2x what it was in the current month. I don't want to be called out of this position, so I will roll it if HPQ goes above my 40 strike.

6) 6-18-09 (22 Trading Days to Expiration)

Bought 300 shares of PALM @ $13.02
Sold to Open 3 July 14's @ $1.02

Return IF Stock is Called = 15.36%
Option Income (1.02*300) = $306
Stock Appreciation (14-13.02)*300 = $294
Net Profit = 306+294 = $600
Annualized Return IF Exercised (ARIE) = 193.33%
(600/3906)*(365/29 Days)

Premium = 7.83%

I got lucky, real lucky... (and even more below)

7) 6-08-09

Bought 500 Shares of PALM @ $11.86
Sold to Open 5 July 11's @ $2.00

Return IF Stock is Called = 9.61%
Option Income (2.00*500) = $1,000
Stock Appreciation (11-11.86)*500 = -$430
Net Profit = 1000-430 = $570
Annualized Return IF Exercised (ARIE) = 89.95%
(430/5930)*(365/39 Days)

Premium = 16.83%