Monday, January 11, 2010

New Position in (MO)

I had my position in MO exercised early last week. I have been looking for a way to get back in in some capacity. The options premiums are low enough at the moment that a covered call isn't attractive. I would like to sell an ITM April so I am on board for the next dividend and hopefully get exercised early again, but there isn't yet an Apr strike available, probably won't be until March because of their option cycle. So I bought some Feb $19 calls for $1.42 when the stock was at $20.30. That's only .12 time premium for six weeks. I'm real comfortable with that. I don't have a set exit point and might just carry them until expiration. I had looked at this as a possible play last week and just didn't pull the trigger. At that time the stock was at $20 and I would have paid $1.17. So I've already missed a 20% move. I was originally prepared to spend $5000, so since I missed a small move already and don't want to be a chaser, I only spent $1420 on 10 contracts and will buy some more if the stock hits $20 again soon.

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