GE - Open Position
Written on December 23, 2008 – 2:23 pm | by admin
Today I opened a 300 share position in GE (General Electric). I did this in two transactions because I blanked and only set my order to 1 contract instead of 3 so I went back and bought another 2. The second 200 were at a better price so it helps numb the pain of double commissions. I just found the “covered call” transaction option at Zecco so my commission prices will be estimates for now. Tomorrow I can update it with more accurate numbers.
Position 1:
Buy: 100 @ $16.31($0 commission)
Initial Investment: $1631.00
Sold: $15 strike @ $1.53 ( $5 commission)
Net Investment: $1483
Dividend: $0.31
Expected Return: 2.92% (0.84% if called before ex-dividend)
Position 2:
Buy: 200@ $16.27($0 commission)
Initial Investment: $3254.00
Sold: $15 strike @ $1.53 ( $5 commission)
Net Investment: $2953.50
Dividend: $0.31
Expected Return: 3.52% (1.42% if called before ex-dividend)
Now for my reasoning behind entering this position. I am fully expecting to get taken out of this position tonight. That is fine with me. I will take my 1%+ and start fresh tomorrow. Should I not get taken out, I will exit my position in GE in the morning. I am willing to eat a debit on the premium to get the $0.31 dividend. Getting the dividend and getting out near breakeven on exiting the position, I should just about double my before ex-dividend returns. We should know in the morning. Has anyone tried this before?
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