Covered Calls for Fun & Income

April 6, 2009

New Position – Lincoln National Corp (LNC)

Well the market opened slightly down and continued in that direction this morning. This type of action is attractive to me since it means I can get stock cheaper with a lower strike, giving me a better chance that they will finish ITM come the 17th.

Again, I am looking for good downside protection, so I focused on CallWriter’s ITM and S&P 500 lists this morning. I had been seeing LNC on several lists last week, but I didn’t think it was the right time. But, today I noticed that the price is holding at support, around 6.40 and I had owned a Covered Call on this back in March that worked out well. Plus the APR 5 had an IV of 230%!

The only hesitation was the though in the back of my mind that I was being seduced by this stock because I had done well previously with it. I quickly dismissed that be re-evaluating my entry criteria and decided to pull the trigger.

That’s it for April unless one of my other April CC’s shows me good return on an early close, like PRU or USO. They are both getting close to the early close return. Stay tuned. If I should close those early, I will use those proceeds for more APR CC’s.

By the way, I updated the In Play page – I hope it’s easier to understand. The way I had it before was an administrative nightmare!

Date

BTO Stock & Price

STO Option & Price

Option Exp/Strike

Cost Basis

ITM Return

Downside Protection

4/6/09

LNC 6.49

LNCDA 1.80

APR/5

4.70

6.6%

27.25%

– Jeff

“I have hardly ever known a mathematician who was capable of reasoning.” Plato (427 BC – 347 BC)

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