This position is in Abbott Labs, a pharmaceutical company. This position was originally opened in January, as part of the Covered Call Dividend portion of the CCIP. The purpose of this type of position is to utilize ex-dividend dates as potential option call dates in addition to the normal expiration. This idea is based upon the fact that the owner of a call, can purchase the stock at the referenced strike if the stock price is currently above the strike. If the time premium remaining on the option is less than the upcoming dividend, often times the stock will be called away, greatly increasing the annualized return. If it is not called away, then I receive the dividend (which is taxed more favorably) and still keep the stock. The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Based on the current cost basis, the potential annualized return for this position if called at expiration in February would be 5.43%.
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