A new covered calls position was established today in the Covered Calls Advisor Portfolio(CCAP) as follows:
Established Devon Energy(DVN) Covered Calls for Aug08.
07/24/08 Bought 200 DVN @ $94.45
07/24/08 Sold 2 DVN Aug08 $105.00 Calls @ $2.30
Annualized Return If Stock Price Unchanged (ARIU): +34.2%
Annualized Return If Exercised (ARIE): +191.0%
Downside Breakeven Protection: 2.4%
As you know, normally I do not establish deep-out-of-the-money covered call positions. In this case however, I believe the recent short-term sell off in Devon shares has been greatly overdone. I'm expecting a sharp bounce back in the stock price, especially in conjunction with the likely strong quarterly earnings announcement forthcoming on August 6th.