I decided to continue tweaking my covered call investment strategy by trying something a little different. In the case of Penn West Energy, which is a oil & gas limited partnership, I am attempting to reap the benefits of option premium as well as the ability of a holder of a call option to exercise said option at any point previous to expiration if the current price is above the strike price. My goal in this situation is that the call will be exercised the day preceding the ex-div date, which will yield a relatively high annualized profit, and if it is not exercised then I can close out the position on the ex-div date, and get the dividend for myself. I will continue to attempt such positions as I find them. The performance metrics are below:
7/21/2009 -- Bought 100 PWE @ 12.79
7/21/2009 -- Sold To Open 1 PWE August $12.50 Call @ 0.6
The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Cost Basis: 12.19
Potential Gain If Called At Ex-Div Date: 2.13%
Potential Annualized Gain If Called At Ex-Div Date: 129.75%
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