OK everybody, I tallied up my covered calls that I sold against stocks on my portfolio for 2010. I started using covered calls to bring in some "added dividend" to stocks I already own.
Are you ready for this????
My take on those contracts was worth 8.9% added to my portfolio for the year 2010. The strategy is to buy stocks that will pay a decent divy 2-6% and that I can sell calls against to pull in between 1/2-1% per month. That should give me a minimum of 8% to up to 18% right off the top BEFORE appreciation of share price. I expect something in the middle, say 13%, which is pretty solid and relatively safe with the stocks I tend to hold.
Now I will nix that real quick when the market indicators that I use tell me to get out as this strategy is part of the "capital appreciation and preservation", appreciate capital in uptrends, preserve capital in downtrends. And yes I will post when that happens and give fair warning before much damage is done to the market and the portfolio.
I will attempt to keep you all posted with my positions and calls sold in 2011.
OK now to the calls I have sold with Jan 20 2011 expiration:
PEP $67.50 Calls
GIS $37.50 Calls
C $5 Calls (I expect these to be exercised unless the market reacts poorly to the Citi earnings report this upcoming week)
I will also sell calls against NLY $18 strike this week for whatever the going price is, I only expect .20/share.