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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