New Position: HAL

Sometimes it is a challenge to find new positions for Rescue My IRA.  I do maintain a set of very selective criteria for the account, typically including stocks that are part of the S&P 500 Index, are rated 4 or 5 stars by S&P, and pay dividends yielding between 3 and 5 percent annually; I also will look at the year to date stock price increase and the 52 week trading range as part of my decision making.  This has helped manage the risk of losing stock positions over the years, but it is somewhat conservative and is why the account will lag somewhat from the S&P annual return.

Sources I use for stock picks generally include the screen described above, but I also will draw a tip from the Yahoo Just Covered Calls board or some of the blogs that are shown over in the right hand blogroll column.  A recent pick from the gang at the Yahoo board was HAL – I set up a 200 share position the other day and sold $41 Dec 2015 covered calls against it.  It just happened to go ex-dividend on December 3, so that was a nice additional return on the shares.

Here is the position plan for HAL, with results reported net of commissions and fees:

HAL

Transactions

Bought 200 shares at average share price $40.94 (total $8,187.00)
Sold 2 $41.00 Dec 2014 covered calls

Net Profit:

1) Options Income:  = $306.49
2) Dividend Income (December ex-dividend): $36.00
3) Capital Appreciation if assigned at $41.00:  -$5.00

Total Net Profit if assigned on the ex-dividend date:  $337.49
Absolute Return on Investment: ($337.49/$8,187.00) = 4.12%
Annualized Return if Assigned and Dividend Collected (18 days):  4.12%*(365/18) = 83.59%