M - Open Position

Written on December 8, 2008 – 8:29 am | by admin

Today I opened a 300 share position in M. This position came to about 9% of my overall portfolio before the selling of the options. With my low portfolio size, I believe that positions should be around 10-15% of the portfolio before selling the option.

Buy: 300 @ $8.7475 ($7.00 commission)
Initial Investment: $2631.25
Sold: $7.50 strike @ $1.45 ( $10.76 commission)
Net Investment: $2207.01
Expected Dividend: $0.1325 / share
Expected Return: 2.92% (1.13% if called before dividend)

Selling this call will not put me below the 52 week low of around $5. Should this position stay with me, I think I can sell options for decent premiums. Retail expectations are really low and should anything positive come out of the holiday season, retail could get a big boost. If the option expires worthless, I will have a net investment in M at around $7.29. I have not made up my mind on whether I will sell the Jan option before or after Christmas and the first retail comps start to come in.


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