rss
Wrote a covered call today on Silicon Precision Industries SPIL. This is the type of stock I seek for covered call writes: $10-$12 share price, good profitability, high volatility, upward price trend.
SPIL is a Taiwanese microchip packaging company. 3rd largest in the field.
I bought the stock for $9.91 and sold the June $10 call for $.55. This gives a 23 day uncalled return of 4.5%.
I purchased Gigamedia GIGM on February 19 for $12.40 a share and sold the March $12.50 call for $.90. The call expired out of the money, thus earning me the call premium.
On March 19 I sold the April $12.50 call for $.85. The stock climbed rapidly through the strike price so on March 27 I bought back the April $12.50 call for $1.77 and sold the May $15 call for $.87. Net cost to me of a nickel plus commissions.
On May 19 the stock was called away at $15. I held the stock for a total of 88 days and earned 27.2% after commissions. That is close to 100% on an annualized basis. The gain is primarily due to the stock price increase and the timely rolling forward of the option.
This stock is very volatile and good use of limit orders on the option trades helped keep the profitability up.
Even though I have not posted my trade recap on Gigamedia GIGM yet, it was called away last week and I have written another covered call on it.
When the earnings report came out yesterday, the stock fell from near $16 to below $15. I entered a net debit covered call trade for the July $15 call at $13.75. I was actually filled at a Net debit of$13.59. Buying the stock for $14.54 and selling the call for $.95. The option premium gives me an uncalled return of 5.8% for 61 days.
I listened to the Gigamedia conference call and to me this company is doing really well. The stock follows a pattern I have seen with some small cap/high volatility stocks: They run up briskly before the earnings release, then drop no matter how good the news.
I purchased Parker Drilling PKD on March 22 for $9.65 and sold the May $10 call for $.65. The option expired in the money and the stock was called away giving a profit of 9.3% for 58 days. This would be about 57% annualized.
PKD has continued to rise in price and I am looking at it and OMNI for trades in the oil services industry.
Alternative Energy Stocks: Stocks Watchlist
After paying $3.30 for gas again today, some of these stocks should be winners.
I had 3 stocks called away over the weekend, so I will recap the prices and profitability of each.
I bought Dynegy DYN on April 4 for $9.72 a share and sold the April $10 call for $.20. That option expired out of the money and on April 24 I sold the May $10 call for $.25. The stock was called away at the May option expiration.
The total return was 5.4% over 44 days after all commissions. This works out to about a 44% annualized return.
I initially placed this trade with a very short, 20 days, time to maturity to make a quick couple of percent if the stock was called away. The option premiums were less than I normally like, and commissions ate up quite a bit of the premium. However, the trade worked out fine and I made a nice return.
