Some folks are describing the current market as “toppy” – meaning we are at a place where trading is looking for support for additional gains, or is hitting resistance that will result in short-term declines. I’m not seeing anything that concerns me just now, but what I have noticed is that the time value in some of the covered calls is eroding and I decided to roll-out three positions: GLW, COP, and T. In T’s case, I have only BTC the old call and have not STO the replacement.
GLW: I BTC the old position, 14 Feb 2012 for $72.00, after STO in January for $107.99, so I made about $36 on his trade. That translates to a little more than ½% in returns on the original share prices. I now have a 14 Mar 2012 on the shares, sold for $67.99, and will look for a dividend announcement soon.
COP: The position was a 72.50 Jan 2012 that I sold in November for $142.74. I bought it back before January expiration for $22.25. Subsequently, I sold the 72.50 Mar 2012 for $54.74. This is the third series of calls I have written on the position, and I look forward to a dividend announcement next month.
T: This transaction is not yet completed, but I did BTC the old 31 Feb 2012 position for $34.75. After STO of $64.24, I netted about $29.49 on these shares. I am holding off on my next call for now, as the stock price dropped on earnings, which featured an adjustment due to the break-up fee that was paid following the failed T-Mobile merger. A bright spot was the receipt of $132.00 in dividends that was recently credited to my account after the stock went ex on January 6.
Unless there is some genuine market excitement next week in the two remaining trading days, I suspect I am finished for the month now that these trades are complete. You never know though, I may get the premium from a new STO on T before the month closes!
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