These are my thoughts and opinions on many topics. My passions are the stock market and helping abandoned and orphaned animals. In this world, it seems most things don't make much sense to me anymore. This is my feeble attempt to share all of the above. The blogs will include items that might make you shake my head as well as give you my take on why they happen. Enjoy.

Saturday, January 16, 2010

More Covered Calls

I have had a decent run up on a small long position in DuPont (DD). It is up 5% in 6 weeks and I figured I would sell at $34 if it hit that target. It went past there and fell back to $34 so here is what I did.

I sold the Feb 10 $34 strike calls for $1.00/contract. Therefore, if they are exercised by the expiration date in February, the profit in this set of transactions is $2.50/sh + $1.00/sh = $3.50/sh.

$3.50 profit per share/$32.50 original cost per share = 10.7% profit in less than 2 months

I will take that any day of the week. If the $34 strike call does not get exercised, I will sell another call for the March 10 expiration. In the meantime I will likely pick up a dividend of another 1%.

Any thoughts?

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