Following my Tradition IRA Covered Calls

Last Updated: February 13, 2013

Disclaimer: This page is just highlight what I have done in the past in terms of investments. It should not in anyway be considered investment advice. Please see an investment professional before you make any investment decisions.

On March 5th, 2012 I decided to share my new covered call investment strategy for my traditional IRA.  My investment goal is to,

find companies with a market cap of at least $200 Million, a positive P/E, a stock price of below $5.00 per share and are traded on the options exchange.  From the remaining companies I will research them one by one to determine whether to move on any of the options available.  The covered calls will be out of the money options that will expire within 0 to 6 months of purchase.  The strike price will be an amount that I am very okay profit-wise.

Since the trades might be months apart I need a place to keep myself accountable. I will update the following sections as I close out of the investment position OR sell another covered call within that same initial position.

For purposes of this page (not my  net worth statements) I will ignore unrealized gains and focus just on when I reinvest in a particular position with another covered call sale or when a particular investment is closed out.

Much more detail can be found in the blog post updates:

Open Equities and Options

My Excel Maritime Carriers Ltd Covered Call

  • Bought 1,000 Shares of Excel Maritime at $1.87 on 3/08/2012
  • Sold 10 EXM Covered Call Option Contracts on 3/09/2012 for a Strike Price of $2.00 in April of 2012 for $189.74
  • Sold another Contract for September 2012 for another $189.74 strike price of $2 (Expired)
  • September Contract Expired – Price took a hard hit.
  • Sold 10 $1 contracts for a net of

 My NSU Covered Call

  • Bought 500 shares of NSU at $4.54 for a total with commission cost of $2,282.30
  • Sold 5 December $5 Contracts receiving $238.14 (expired)
  • Sold 5 March $5 Contracts receiving net $66.87

My EXEL Covered Call

  • Bought 500 shares of EXEL at $4.94 for a total, with commission cost, of $2,477.95
  • Sold 5 December $5 Contracts receiving a net of $189.84 (expired)
  • Sold 5 May $5 Contracts receiving a net of $213.85

Close Equities and Options

My Sprint Covered Call Purchase

  • Bought 125 Shares on January 30, 2012 for a total of $276.45w/com
  • Bought 575 Shares on February 22, 2012 for a total of $1,306.42 w/com
  • ***
  • I received $111.89 on the option contract
  • Total income of $1,903.89 Minus purchase price (and fees) of $1,362.67 = Total Gain $541.22 (39%) inside 6 months.
  • Last option contact was called on January 18th, 2013 providing another net $342.04
  • Increasing my gain (as well as time invested) from $541.22 to $883.62 for a gain of 64%

My Radian Covered Call Investment

  • Bought 300 Shares of Radian at $3.50 on 3/05/2012
  • Sold 3 RDN Covered Call Option Contracts on 3/05/2012 for a Strike Price of $4.00 in May of 2012 – Gained $111.97
  • Bought 300 Shares on 04/23/2012 for $2.99/share
  • Bought 300 Shares on 05/04/2012 for $2.30/share
  • Received a $2 dividend
  • Sold 5 August $3 contracts for $116.92
  • Sold 3 August $3.5 for $111.97
  • The $3 August Contracts got called netting me after fees $1,492.01
  • Still own 300 shares since the $3.5 shares didn’t get called
  • Sold underlying 300 shares for $1,453.01 Net
  • Received a $.75 dividend
  • Cost – $1057.95 + $904.95 + $697.95 = $2,660.85
  • Received – $2.75 + $116.92 + $111.97 + $111.97 + $1,492.01 + $1,453.01 = $3,288.63
  • Total gain $627.78
  • 23.59% over the course of 7 months