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San Juan Basin Royalty Trust Message Board

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  • hotpanera2 hotpanera2 Mar 22, 2006 12:33 PM Flag

    FDG negativity

    Another possibility for those who don't want to sell is to write a covered call. For example, the Sept 40s can get one at least 1.50. If the stock stays in a fairly narrow range, the 8% annualized from the call premiums plus the dividend makes it a very decent income investment. Of course, if one is predicting a substantial decline, an outright sale would be preferable but I'm not. The '06 prices should be good enough for 1.20 Canadian (a .20 decline from the Q1 div) which is close to 11% at 38 (assuming full recovery of the 15% WH).

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    • I have been thinking real hard that selling covered calls is something I should do. If my stock gets called away moving up, there's nothing to prevent me from immediately buying more for my own account, is there? I'd lose (or gain, as the case may be) whatever happened in the stock between the time I found my stock was called away, and the time I bought more, correct?

 
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