Weekly Newsletter   Challenge account   Weekly Newsletter   

New trade – MBIA Inc (MBI) covered call

A few days ago when I was considering entering my DMD trade I came across MBIA company as a potential covered call candidate. I read about that company and the news I could find were discouraging. MBIA was fighting with Bank of America about some insurance claim accusing each other from fraud. At some point it looked like MBIA would potentially go bankrupt. So I decided to go with DMD and wait on MBIA.

I continued reading as much as I could find and yesterday I decided to take this trade and I opened a new covered call. Again, this is a total return trade, so I want the stock to be called away at expiration (or even early).

01/03/2013 11:55:47 Bought 100 MBI @ 8.18
01/03/2013 11:55:47 Sold 1 MBI Feb 16 2013 9.0 Call @ 0.52
Total trade: $766.00
Commissions: $8.78
Total NET trade: $774.78

Option assignment: $900.00
Option assignment fee: $19.00
Expected proceeds: $881.00

Expected NET gain: $106.22
Expected ROI: 13.71%

If the stock will be called away, fine I will realize the above described profit. If the stock will not get called away I will continue selling covered calls as long as the stock gets assigned.

Happy Trading!

Leave a Reply

Your email address will not be published. Required fields are marked *