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Strategies & Market Trends : Dividend investing for retirement -- Ignore unavailable to you. Want to Upgrade?

To: Steve Felix who wrote (3710)	2/8/2010 9:36:01 PM
From: Debt Free	1 Recommendation Read Replies (1) \| Respond to of 34328

I agree and wish someone would share what they are doing in real time. Here is real example - On Dec 30 I sold some covered calls against part of my PFE position. Date initiated Dec 30 09 End Date Feb 19 10 Days held 51 Beginning price $18.55 strike price $19.00 sell covered call @ $0.44 Max Net Gain per share $0.89 Dividend received $0.18 Total Max return $1.07 Number of shares 1,000 Net Gain if stock sold $1,070 My thinking on this trade was as follows. I am over weighted in PFE and want to wanting to move some money into other areas but I don't want to rush to do it. So I looked at my projected return for the 51 days that this trade could be in place. If the stock is called away at expiration, then I would have made a 5.8% return for my 51 days or 41% on an annualized basis. I decided that I would be extremely pleased with that so I entered the trade. Now when the stock spiked in the middle of January, I have to admit that I was kicking myself a little bit about missing out on part of that move. I thought about buying back my call at a loss and then try again at a different strike price. But I decided that I would stick to my original thinking and be extremely satisfied with my 5.8% gain for 51 days even if it was not the maximum amount that I could have received. With the correction that has now occurred in the price with the current price of 17.84, it appears likely that I will keep my stock, the entire proceeds from selling the call ($440) plus the $180 dollars from the dividends. I am now trying to decide my next steps but I will probably initiate a similar trade soon on my PFE position. Overall in this case, the selling of covered calls significantly increased my income on this stock above what the dividend would have brought. It is my plan to sell covered calls (both in and out of the money) against a large part of my portfolio on an on-going basis.