This position is another in my ex-dividend strategy, which involves creating an ITM covered call position in a company which has an ex-dividend date prior to the expiration date of the option. Microchip Technology is a company which develops and manufactured specialized products for the semiconductor industry. The company has a profit margin of 24% which is much higher than peers, and yields a giant 5.66% which is amazing for a tech company. The company also reported earnings ahead of expectations in August, and based on recent earnings reports from other semiconductor companies, I expect MCHP to report good earnings in November. The company has not yet declared its dividend, but it should be paid in the second week of November based on historical payments. The profit/loss info is below:
10/20/2009 -- Bought 100 MCHP @ 26.14
10/20/2009 -- Sold To Open 1 MCHP November $25 Call @ 1.54
The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Cost Basis: 2460.00
Potential Gain If Called At Ex-Div Date: 1.4%
Potential Annualized Gain If Called At Ex-Div Date: 22.22%
Potential Gain If Called At Expiration: 3.00%
PotentialAnnualized Gain If Called At Expiration: 34.27%
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