Adding Shares and Rolling Out CSX

I’ve written a few posts about my CSX position.  I opened the position in November at the very start of the Rescue My IRA account.  That original position was 200 shares, and I subsequently added 200 shares in a second transaction.  Just last week I added 100 more after finding that all the adjustments this month and last had generated enough cash for it.

I’ve sold covered calls on the shares since I’ve held them.  Up until now I’ve only missed one month, as a matter of fact – January, although since my current positions are Aug 22.50, I will miss July as well. That August strike price is the one I have been writing the whole time, since my share basis is $21.72.

Here’s the analysis:

CSX

Transactions

Total covered call premiums prior to current contract:  $647.91
Additional premiums, Aug 22.50 contract:  $355.47

Total covered call premiums:  $1,003.38

Dividends (as of May 2012 ex-dividend date):$120.00

Capital gains if assigned at $22.50: $370.99

Total Net Profit if Assigned in August at $22.50:  $1,003.38 + $120 + $370.99 = $1,494.37
Absolute Return on Investment: ($1,494.37/$10,861.01) = 17.09%
Annualized Return if Assigned (270 days):  17.09%*(365/270) = 23.10%

These shares continue to deliver the kind of yield I am looking for – even without the capital gain at 22.50, my return is in excess of 12% for the 270 day holding period.  My goal is 12% a year, so with CSX, I am slightly ahead of schedule.  As of Friday, the stock was out of the money for these August calls.