Friday, March 8, 2013


In the previous post the unusual event of a partial call-away of TAL was noted - a few days later it happened again with WMB. Apparently that was all the investor/marketmaker needed. Hopefully this is not a trend, as it will increase commission costs slightly.

Today, with STX (Seagate) hopefully going ex-dividend very soon (still not declared from Dec.12, 2013), it has been raised twice the past year, is rated B by Schwab, but still should be hedged. Therefore, the March 27 strike call (5 points ITM) was rolled UP to the 28 in Sept. The call alone should garner an 8.8% annualized return (over the six months), plus the dividend (2), would be nearly 15% - more if called away in June.

Nota bene: Despite excellent returns so far this year in DITM, the question has to be posed: is trading really worth it? With the new GI Bills (Gov't Intervention), the logic of a trade is such -
Do a Buy/Write giving up the bid/ask spread; pay commission(s); if profitable, pay state and federal taxes on it, pay ( in my current case) a tax preparer big bucks to analyze the trades (brokers do not have to report cost bases in options until 2014, so Gain/Loss has to match 1099B). Not to mention any losses or break-evens. Once again our wise solons are contemplating a transaction tax again.  

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