Love those Dividends

The dividend for my NAT position Was credited to the account today. $132. That plus the $90 received as the sold call option gives a 6.0% return net of commissions on the initial investment 2 months ago.  The value of NAT is down a little, so we will see where the return sits when the option expires on 12/15.


A Little Background

Dang, it has been 10 days since my last post. I want to post a minimum if twice a week. Not much going on the account since I will be standing pat until my NAT call expires on 12/15.

I have a long standing interest in the stock market and option investing. Up until this point, however, all of my investing has been with mutual funds and stock drip plans. About 6 months ago I became aware of the stocks of oil tanker companies. These companies pay very high dividends when they are profitable and also have enough volitility to have good option values. At that time I started doing some research into the stocks and watching their prices, dividends and option values. It appeared a covered call strategy to capture the dividends might be quite profitable.

Next: Selecting a broker and setting up the account.

End of the Week

Since I have $59 in cash in the account, no possible trades. Plan is to stand pat until the Dec call on NAT matures (?). Currently out of the money for NAT so will decide at that time whether to sell another call.

It appears now that I have settled on a strategy, I will be making about 1 trade a month until the account grows until I can carry more positions. Next week I will attempt to put into words the strategy that swims around in my head.

Used the Tag Tracker here and found another blog on options: Trading Options. I am going to use his disclaimer on my about page.

Today’s Trade 11-16-6

Today I bought 200 shares of ENCY ($5.92) and sold 2 January 5.00 calls. Net cost $875. The little covered call calculator shows a 13.3% net profit if called. This is a 74% annualized return (65 days) with 27% downside protection.

Starting Position

My account is with Trade King. Starting value is about $4,200. Current positions are 100 shares of NAT and short a Dec 35 call on the NAT. Cash is at $950.

Hello world!

It is about time I got around to starting a blog. I have been reading them for over a year on several areas of interest. One of my interests is investing, especially stock options. I recently moved a small IRA, about $4k, from a mutual fund to a discount brokerage account and will be using covered call strategies to increase the value and learn how it works.  I wll keep a detailed account of what I am doing and the steps I am taking. More later!