The Money Tree

Safely Generating Income in Retirement

Archive for January 3rd, 2012

New Trade – EXC

Posted by mounddweller on January 3, 2012

Fellow Traders,

I entered a new trade in Exelon (EXC) today.  Actually, I entered two trades but only one got filled.  Many of my long-time readers know that I have had a position in EXC since April 2010.  I started out by selling naked puts at the $42.50 strike price.  I had the stock put to me at that price.  Since then I have sold covered calls and collected dividends on those original 200 shares.  I have also sold naked puts from time to time in an effort to acquire another 300 shares.

Today, EXC along with a whole host of other utility stocks took a substantial hit despite the overall market rising strongly.  I took advantage of this by deciding to sell another round of naked puts.  Specifically, I did the following:

STO 3 FEB $40 puts at $0.65.

I wavered between selling the JAN $41 puts at $0.40 and the FEB $40 at $0.65.  In the end I decided to go with the FEB $40 strike because it was closer to a stronger line of support.

Today, I also tried to BTC my JAN $44 calls.  However, this trade went unfilled as I had a limit order in to buy at $0.05.  Had I been willing to pay $0.10 I most likely would have been able to close out that trade.

Including my latest NP trade today I have been able to reduce my net cost over the past 21 months from $42.50 to $32.31.  That is a 23.98% ROIC.  My goal in this trade is to eventually own 500-800 shares of EXC with a ZERO net cost.  Granted I have a long way to go to accomplish that goal but I feel I’ve gotten a good start.

Regards,

Troy

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