Monday, May 9, 2011

BOEING, Symbol BA, 17.72% gain in 9 months

                Sometimes we have to wait for good things to happen.  We have to trust our methodology.  Yesterday I profiled three option trades that included Boeing.  Today I want to review the results of a Boeing option trade I started last August.

                I bought two lots of Boeing at an average cost of $67.77 in August of 2010.  At the very same time I sold calls against those shares.  One call paid me $1.83 per share and the other paid me $2.51 per share with a strike price of $75.  If the call is assigned, I would have gained a little over 13%.   However, these calls expired in November, 2010 and I still owned my original shares.  Boeing’s stock price rose and fell during this time.  I received two dividend payments as I waited for the next opportunity to make money off covered calls.

                I measure an opportunity as a minimum of 10% gain.  My next opportunity came in April, 2011.  I sold calls for $1.77 with a strike price of $75 and May 21, 2011 expiration.   Yesterday, the person who paid me the $1.77 per share in call premium bought my Boeing for $75.00.  This is called being assigned.   I am encouraged by this action because as you may recall, yesterday I bought some more Boeing at $79.89 and I am hoping Boeing’s stock price will go up.  My experience with this kind of pattern is good.  Everybody wins.  The buyer of my Boeing wins as it continues to go up and I win with a total 17.72% gain in only 9 months.

                Let’s hope my new Boeing trade will perform as well.  The point of this exercise is to help you understand how to create investment income from solid companies that may not quite be dividend machines.

Very Truly Yours,
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