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American Realty Capital Propert Message Board

  • barmy_madeoff barmy_madeoff Mar 26, 2014 10:29 AM Flag

    covered calls

    I sold covered calls. Once there's a spin off, does each contract represent a call on 100 shares of each entity or is it adjusted in another way?

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    • I would call your broker for best answer. Just curious, what calls did you sell. I haven't seen a really decent play selling calls on ARCP.

      • 1 Reply to notashorter99
      • Well, if I said I sold the Jan 2015 $15 @ 65 cents, there would undoubtedly be howls of protest about selling calls that far out, but I bought this simply as an income holding. Since they pay monthly divs and rates generally are heading higher, I doubt this will see $15 by year's end and if it does, someone can give me the $15 and I'll decide what to do next or I might buy back the calls as they near expiration if they're just slightly in-the-money.

        I sold nearer-dated calls originally and bought them back when they dropped in price and then sold the Jan calls when someone on CNBC was talking up the stock. I see it simply as an income enhancement. Since my basis is now down in the mid-$12 range, those calls added a bit more than 5% to this year's income. If Yellen makes a lot of noise and the stock takes a hit, I could buy those calls back and wait for another opportunity to sell some.

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