Thursday, December 1, 2011

Intel - About those Covered Calls.

What a difference three days makes. INTEL  was trading at $23.30 on Monday and near $25.00 today. Not sure that anything material has changed in the fortunes of the company, but if Mr. Market can change its mind so quickly, "rationally" and "efficiently" so can
After buying back one  lots worth of $25 calls on Monday, sold one lots worth today.  CCI decided to go all the way out to February this time for a few reasons. 
  • The premium of $1.25 ( 5%)  driven by an IV of 28 seemed significant enough to pursue.
  • This date is after the next earnings announcement and x-dividend date both of which could shrink volatility.
  • The overall portfolio already has several Jan option positions and wanted to start to create some date diversification.
  • The stock rockets upward. One lot of the position will be called away at an effective price of $26.25 and the remainder of the lots owned will be up quite nicely.
  • The stock retraces some of its recent gains or just stall out around this level, and there should be an opportunity to harvest some of this premium in the near term.

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