Friday, February 18, 2011

Intel - Covered Call Intiatied

Intel had a nice week and broke through $22.

Took the opportunity on this pop to sell one lots worth of May $23 calls for $.49 net of commissions.

Scenario 1 - stock runs over $23 in the next quarter and one lot of stock will be called away and result in a lighten up of the portfolios position in Intel. Over the next three months this lot will return $.49 in options, $.18 in q2 dividend, and about $.80 in capital appreciation.
A total return of $1.47 or 6.6% in a quarter.

Scenario 2 - the stock will stay flat and the 2% option premium will be pocketed.

Scenario 3 - Intel stock (and perhaps the overall market) will hit a correction period this spring and this option will be able to be covered for a small hedge on the position.

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