This position was opened as part of my ex-dividend strategy. The idea here is to sell a call on a stock which be paying a dividend during the next few weeks in hopes that the stock will be called away the day before the ex-dividend date. The position in Applied Materials was opened as it is currently at multi-year lows. The company has unfortunately had some negative earnings as of late, but I believe the stock has alot of upside potential in the future due to its work in the semiconductor area (it profits regardless of whose chip is used), as well as the solar area which should benefit from legislation and regulation in the next few years once all of this health care debate is over. The company yields about 2%, and the ex-dividend date is on November 9. The profit/loss info is below:
10/20/2009 -- Bought 100 AMAT @ 13.39
10/20/2009 -- Sold To Open 1 AMAT November $13 Call @ 0.76
The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Cost Basis: 1263.00
Potential Gain If Called At Ex-Div Date: 2.46%
Potential Annualized Gain If Called At Ex-Div Date: 44.92%
Potential Gain If Called At Expiration: 3.01%
PotentialAnnualized Gain If Called At Expiration: 34.32%
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