Thursday, May 21, 2009

Establish Bally Technologies Inc Covered Calls


A new covered calls position was established today in the Covered Calls Advisor Portfolio(CCAP) with the purchase of Bally Technologies Inc (BYI) covered calls as follows:

Established Bally Technologies(BYI) Covered Calls for Jun09:
05/21/09 Bought 500 BYI @ $26.63
05/21/09 Sold 5 BYI Jun09 $25.00 Calls @ $2.80
This will be the final new covered calls position established for Jun09 expiration. The remaining available cash in the CCAP is 6% which will be used to effect roll-up transactions prior to expiration as appropriate.


Bally Technologies, Inc. engages in the design, manufacture, distribution, and operation of gaming devices and computerized monitoring and accounting systems for gaming industry worldwide. Bally is maintaining its year-over-year sales and earnings results despite the current very deep recession being experienced by the gaming industry. Bally continues to expand its new product development offerings which enables it to be very well positioned to benefit from an expected improvement in consumer sentiment in the upcoming months.

Below is this Advisor's 'Buy Alerts' spreadsheet for BYI. It scores well overall at 21.35 total points. Note: A score above 20 is required for any company to be given further consideration as a potential covered calls investment.




















A potential result from this Bally Technologies covered calls transaction is:

Absolute Return if Exercised at $25.00: +4.4%
=[$2.80+($26.63-$25.00)]/$26.63
Annualized Return If Exercised (ARIE): +53.4%

Downside Breakeven Price Point: $23.83
Downside Breakeven Protection: 10.5%

2 comments:

  1. Great site Jeff. I'll be monitoring it more closely. Do you have any suggestions for a book or website to give me the full rundown on covered calls. I understand the basic principles, but need to a good guide.

    ReplyDelete
  2. Hi Neil,
    Great to hear from you.
    The best single book devoted exclusively to covered calls is:
    http://tinyurl.com/o5pqjl
    A couple of worthwhile websites for starters are:
    http://tinyurl.com/oj2ct2
    http://tinyurl.com/2e6mtz
    Best regards,
    Jeff

    ReplyDelete