Covered CSX

CSX has been sitting in my account, uncovered since I was assigned the shares back in August at $25.00.  I was in no rush to sell covered calls on my 100 shares because I thought CSX had gotten too cheap and it was only 100 shares so it didn’t really do much for my account either way.  I opted to hold, collect premiums and dividends and wait for a rebound.  We got the rebound and the subsequent pull back and now CSX looks like it has room to get back to its previous recent high just above $23.00 at best.

I’m not sure it’ll make it there so I decided to go ahead and sell a call today while the premium was decent.  CSX goes ex-dividend on November 28th, so I pushed the expiration out to December for my option.  While CSX was trading at $21.86 I sold one December 16 $22.50 covered call for $0.75 and received $74.66 after commissions.  I debated selling a new naked put out of the money to go with it, but think I’ll just exit the position and leave it alone for a while.  The premiums haven’t been great for a while which is another reason I didn’t rush to sell covered calls earlier and since that’s the case I don’t really need it in my account taking up cash.

If CSX climbs above $22.50 within the next three and a half weeks I might see my shares called away early for the big $0.12 quarterly dividend.  I won’t be upset by that because I’ll have my case sooner than later and can get it working elsewhere.  If the shares are assigned I’ll be taking a loss on the series of trades of less than $50.  Not bad for a bad pick.

Did y’all see QCOM today?  Too bad I went with a $52.50 covered call on my shares.  Most likely I’ll be getting out at the same price I got in (which was my plan).  I’m keeping my eye on it though.  This stock is so volatile I might get a chance to either buy back my covered call for a profit or sell a new naked put at the same strike for a decent premium.  I don’t have a limit order in yet, but might enter one very soon.