Covered Calls for Fun & Income

March 19, 2009

One more for tomorrow

Filed under: Covered Calls, Investing — Tags: , , , , , — Jeff @ 12:31 PM

US Steel Corp (X) made a rather large move this morning. As I write this it’s up 9.4%. If you look at my technical indicators, you will see that it’s at the 20 EMA and the Stochastic just crossed 20 yesterday. Historically the stock has done well in this situation, and past performance is all we really have to go with, isn’t it? Fundamentally, this is a solid stock although it’s not doing well in this economic climate. Regardless, they are still paying a dividend of $1.20/year which is an annual yield of 6.3%.

I won’t mind holding on to this for a few more weeks or months, so today I wrote a Covered Call slightly OTM for March. If it finished OTM tomorrow and the price is still inching up, I will wait to write an April call to see if the price moves above 22.50. I have done this a few times in the past and it has worked very well.

BTO Stock

STO Option

Option Exp/Strike

Cost Basis

ITM Return

Downside Protection

X 22.09

XOKCX 0.70

MAR 22.50





“These days an income is something you can’t live without–or within.”


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