I started the Rescue My IRA account with the goal of being more aggressive about investing than I have in the past, but every position has to make a profit - some less, some more, some minuscule and some generous - but profitable, nonetheless, and so far that is working. On the upside, NVS is a pretty strong stock that meets my investment criteria, so holding it for a longer than average term doesn't bother me, and I will make some money on it, so we're good.
Still, when the ex-dividend price drop hit, the stock went down from my basis of $57.36 to $55. So I am looking at biding time in this position. I have done a roll-out of my original 57.50 Mar and rolled down also, to a 55 Apr. That will extend my holding period to about 60 days, and bring my annualized return down some, below where I would like to see it, but I'll continue to monitor and see what else I might do to improve my profits.
Here's the analysis:
2/25/2012 Sold 1 NVS Mar 2012 $57.50 at $0.30 (total $21.74)
1) Options Income: = $84.23
2) Dividend Income: Ex-date was 2/27, $246.00
3) Capital Appreciation if assigned at $57.50: -$253.11
Total Net Profit if Assigned and dividend collected: $84.23 + $246 - $253.11 = $77.12
Absolute Return on Investment: ($77.12/$5,736.00) = 1.34%
Annualized Return if Assigned (60 days): 1.13%*(365/60) = 8.18%
Friday's closing price was out of the money for the 55 strike in the current option.