Monday, March 19, 2012

Sold Covered Calls in Teva

CCI has held a half position in Teva (TEVA) for awhile.

The primary reason for holding the stock was management's long-term goal of $7 eps driving a very attractive forward validation and generic drugs seeming to be a growth market.   My original thoughts on Teva are shown here

With a new management team coming into place it is less clear if their is still a commitment to this longer term goal, or at minimum it is likely that new management may want to take some time to adjust their view of the future plan.  Further one of the risks related to Teva is that despite the fact that it is a global company, the stock price will likely be adversely  impacted by any macro issues related to the mid-east.  Tensions in that area of the regions seem to be growing and probably already having a drag on the stock price.  Our position is near break even.

CCI sold one lot of the stock as documented here .  With the stock trading around $43.50,  CCI sold one lot of April $45 calls for about $.45 after commissions today.  If this stock rebounds toward $45 it will be called away as part of continuing to reduce exposure to this holding.  If the stock does not rise, the 1% premium will serve to provide a very small buffer to downside risks.

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