We wrote Feb 15 covered calls against half our DryShips shares at 2.5. The calls were slightly in the money when we wrote the calls early in the day. Dryships (DRYS) stock is very volatile and so the premium on the calls is relatively high. Here are the possible outcomes and our strategy with this trade:
- The stock continues to go down: We rollover and continue to collect premiums on the way down. This would help reduce our real cost basis.
- The stock trades near where it is: We let it expire if they are out-of-money or close it for a small outlay if they are just barely in the money right before options expiry.
- The stock spikes up: We allow the shares to be called away at options expiry. That will result in a roughly 10% overall loss, given our first purchase of these shares were at $19.25 on 10/9/2008. The net result will then be that we will continue to hold the shares we purchased on 11/20/2008 at $4.08, a much lower cost basis.
| Stock | Buy Date | Buy Price | Current Price | Current % Of Portfolio | Unrealized % Return | Yield as % of BOY Portfolio Value Plus Deposits |
| Altria (MO) | Various | 16.69 | 16.84 | 4.35 | 0.93 | 0.16 |
| Philip Morris International (PM) | 1/4/2005 | 32.19 | 42.12 | 7.45 | 30.84 | 0.23 |
| Kraft Foods (KFT) | Various | 24.03 | 28.64 | 4.93 | 19.16 | 0.11 |
| Pfizer (PFE) | Various | 24.37 | 17.50 | 7.53 | (28.18) | 0.33 |
| ICICI Bank (IBN) | 5/18/2006 and 08/01/2008 | 25.28 | 16.86 | 7.25 | (33.30) | 0.17 |
| Taiwan Semi (TSM) – Call Value | 7/27/2006 | 8.71 | 7.50 | 6.47 | (13.58) | 0.24 |
| Advantage Energy Fund (AAV) | 11/2/2006 | 11.22 | 4.53 | 1.95 | (59.64) | 0.22 |
| Central Europe & Russia Fund (CEE) | Various | 39.23 | 15.66 | 4.72 | (60.08) | 1.85 |
| Patni Computers (PTI) | 8/10/2007 | 20.85 | 4.80 | 2.07 | (77) | 0.03 |
| Itron Inc. (ITRI) | 11/07/2007 | 85.01 | 62.64 | 5.39 | (26.40) | None |
| Anthracite (AHR) | 11/09/2007 | 7.97 | 2.05 | 0.88 | (74.28) | 0.35 |
| ClickSoftware (CKSW) | 11/09/2007 | 4.61 | 1.92 | 1.65 | (58.35) | None |
| Harvest Energy (HTE) | 11/28/2007 | 21.01 | 8.98 | 3.09 | (57.27) | 0.45 |
| iRobot (IRBT) | 12/18/2007 | 18.65 | 8.39 | 2.89 | (54.63) | None |
| LDK Solar (LDK) | 01/22/2008 | 30.49 | 13.93 | 3.60 | (54.32) | None |
| Aegon N.V. (AEG) | 04/28/2008 | 15.99 | 5.53 | 1.43 | (65.41) | 0.24 |
| LM Ericsson (ERIC) (AEG) | 05/05/2008 | 11.83 | 7.23 | 4.98 | (38.87) | 0.20 |
| TD Ameritrade (AMTD) | 05/21/2008 | 17.68 | 12.65 | 4.35 | (28.47) | None |
| Trina Solar (TSL) | 06/06/2008 and 07/31/2008 | 45.61 | 8.55 | 1.84 | (79.70) | None |
| Costco (COST) | 08/01/2008 | 62.28 | 48.80 | 4.20 | (21.64) | 0.03 |
| Frontline Limited (FRO) | 10/06/2008 | 36.95 | 31.48 | 4.06 | (14.77) | 0.41 |
| DryShips Incorporated (DRYS) | 10/09/2008 | 11.66 | 14 | 7.23 | 20.08 | 0.41 |
| Companhia Siderurgica Nacional (SID) | 10/10/2008 | 11.47 | 15.19 | 5.23 | 37.73 | 0.02 |
| Cash | 2.68 | |||||
| Total Portfolio | (35.35) | 5.46 |
- For Altria and Philip Morris International, assumed spin-off ratio of 30.83:69.17. Altria is yet to supply the cost-basis info
- The yield column is current as of 11/21/2008.
- For Taiwan Semi (TSM), we wrote Feb 7.5 covered calls on them on 01/05/2009.
- For DryShips (DRYS), we wrote Feb 15 covered calls on them on 01/16/2009.
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