Fri Sep 26, 2008: Make 3% Per WEEK from Covered Calls!

American Airlines (NYSE-AMR) October 10 covered calls are currently yielding 9.2% with only three weeks to go until expiration on Friday October 17th!

That's a generous 3% per week income assuming the stock stays above $10 per share.

Right now AMR stock is trading at $10.86, which gives a little cushion to covered call writers. The break-even point for this trade is the net cost, which is (10.86 stock purchase price - 1.70 option income = 9.16).

If the stock does fall below $10, the October calls will expire worthless and then more calls can be written for the next month.

One-year chart of AMR stock

After a period of relatively low returns for option writers, the recent stock market volatility has opened up some great opportunities, which I'll be writing about in weeks to come.

Until next time, best of luck with your option investments!