Sometimes it is better to be lucky than right….Going into Wednesday of this week, I was telling myself that I should have never entered into the second covered call a month ago when Lehman (ticker: LEH) was at trading at $24.20. During that posting, I still had the opportunity of a gain…

But miraculously, in the last two days of the week, LEH rose from $16.65 to close at $19.11 executing my covered call strategy that I was engaged in for about two months.  I guess I have to thank the SEC with the recent announcement to slow down the naked short selling, definitely benefiting the financial sector.  In the below exhibit, you will see the 5-day chart of Lehman that saved the day for my trade.

With this rollercoaster of a paper trade, I have captured a 1.7% net gain after commissions and taxes, resulting in a 16.1% annual percentage rate (APR). This trade outperformed the S&P 500 as a benchmark, which performed at a -7.4% over the same time period. Here are the results of the entire trade, which I will track in my portfolio:

Have you been successfully with this trade, if so let me know by leaving a comment.  If you are interested in getting the latest posting from Finance Puzzle, please subscribe.

Author Disclosure: At the time of posting, I am neither long nor short LEH. This trade is a “paper” trade and is being used for educational purposes.

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