Fri Oct 31, 2008: Yahoo! Covered Calls!

With the stock of Yahoo (NASDAQ-YHOO, $12.82) near its lowest price in years, November 13.00 covered calls are currently yielding 11.2% with only three weeks to go until expiration.

Five-year chart of YHOO stock

This is another example of more than 3% per week income assuming the stock is unchanged.

If it gets called away at $13.00 per share then the total return will be 12.7%, just over 4% per week.

If the stock stays below $13, the November calls will expire worthless and then more calls can be written for the next month.

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