The Investment Road to Freedom

March 11th, 2013 at 7:27 pm

Ford – Closed and Opened Covered Call Position

Today with Ford seeing a 2.77% increase today and eventually closing at $13.34 I decided to roll up and out my Apr 2013 $13 call to avoid any shares being assigned away from me. With the stock at $13.29 I BTC the April call for $0.54 a share, which after commission cost me $68.98. Every time I roll a call I want to make sure it is for a net credit – so in this case my next move had to bring in more than $68.98. The only strike price and date that did this was the Jan 2015 $15 at $1.22, unless I went for the Sept 2013 $13 strike at $1.08 which I did not like. Ford has not been at $15 since March/April of 2011 and with still less than stellar figures coming from the European branch I think we will be staying below this for at least the next 12 months. The Jan 2015 $15 call brought in $107.01 after commission. This roll up and out resulted in a net credit of $38.08 ($107.01 – $68.98) after commissions which is just shy of what my 100 shares earn in dividends each year.

In the 3 month chart below we can see the buy signal in the MACD though it has not yet crossed the center line. Today’s rise and the charts made me decide against the Sept $13 strike.

My cost basis in this account (IRA) is now $11.15. I also own 100 shares in my taxable account.

 

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