BA Covered Calls

I keep saying that my focus will be on my brokerage account, mainly because I prefer naked puts over covered calls, but I think Boeing Co (NYSE: BA) is worth writing about. 

I just bought 100 BA at 94.5181 (approximately) and sold a covered call at 2.70.  I like the trend line for BA and its 10, 20, 50 and 100 day moving averages are all in the proper order going no lower than ~89.80 for the 100 day.  I doubt BA will drop below 90 before the my call expiration.  If it isn’t above 95 at closing, my cost will be reduced to 92.02 and I’ll be writing another covered call.  If BA does get called away and I’ll have a 19% annualized return, tax free in my IRA. 

Schaeffer’s research gives BA a 6 rating, putting it slightly on the bullish side.  I like that they just reported strong earnings and believe this should continue for at least a few more months, if not the rest of 2007 and possibly 2008.

A side note on this trade is that it takes me within $6300 of being fully invested in my IRA which will help bring my focus back to my brokerage account where I still need to sell puts on $40,000 worth of underlying stocks to get to where I want.  I was planning on selling a naked put ITM on BA, but saw the covered calls OTM offered a better return. I try to keep my options trading simple since I work a full time job.

My IRA goals are much different than my brokerage account.  I’m hoping to keep a 13% return in my IRA, but I’m aiming for better than a 20% return in my brokerage account, really more, but that’s just hard to be realistic over the long term.

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