TDW Stalled and I Sold Covered Calls

Tidewater Inc (TDW) dipped with the most of stocks this morning and I decided to reduce my cost per share again.  While TDW was selling at $39.51 today I sold 2 TDW April 40 covered calls (TDWDH) at $1.40 and received $268.50 after commissions.  I’ve been considering it for a while, but thought TDW might make it closer to $45 before it took another dip.  It might recover soon and still get to $45.00 before going much further south, but I opted to pull in some more cash while I had the chance still.

I bought 100 shares of TDW on July 21, 2008 for $65.00 and another 100 shares on October 20, 2008 for $50.00.  Both of those lots came from naked puts I sold and took the option assignment on.  Since June 2008, I’ve sold options on TDW 11 times including today’s trade.  Eight of those were covered calls and three were naked puts (two of the naked puts earned me shares).  My cost per share with the two lots I bought is $57.70 including commissions.  I’ve taken in $3,161.50 after commissions from the options I’ve sold and have reduced my cost per share by $15.81 to $41.89 per share.

If the covered calls I sold today get assigned I’ll sell my shares for a loss, but over the history of the trade series my loss will only be for less than $400.  I don’t consider that too bad for what I would have lost if I had not used options on this stock.  If TDW stays below $40.00 per share I’ll re-write covered calls and will probably sell new naked puts at a lower strike and same month expiration again (i.e. a short strangle).  TDW is too far away from the $35 strike to make it a viable option for selling new naked puts for April and I don’t want to go out to May expiry until I see how my new April covered calls do.