Wednesday, March 14, 2012

Selling Covered Calls on Cisco....Again

With Cisco (CSCO) trading back near its 52 week high, CCI continued with the plan of selling covered calls against a Jan 13 $10 call  position.

Specifically, CCI sold the May $21 calls for a credit of $.48/contract after commissions.   A few scenarios:
  •  If the stock does break out over $21 in the next two months the combined leveraged from the gain in the LEAP and the covered calls sales to date will be up approx 40%.
  • If the stock stalls out or falls in the next two months, the covered call will yield 2.3% (before leverage) to soften the blow of the any market pullback. 

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