WMT - Adjustment

The following adjustment was made today on WMT:

Last week Walmart announced its plans for a share buyback, which was good news for shareholders. The stock closed up almost 4% on Friday. Today, the stock continued to rise about 3.50%. With the stock price above $51, the Jun08 47.50 call was deep ITM and had very little time value left. I needed to make an adjustment to avoid assignment. As always, I try to roll the calls for a net credit. With the Jun08 47.50 call at $3.80 ask, this was not going to be possible, since I couldn't find a further out higher strike for that price. So, since Walmart is still rated 5 Stars by Morningstar and is still a good buy at this price, I decided to add another 100 shares and sell 2 Dec08 52.50 calls for a net credit.

04-Jun-07 - Buy Back & Roll Out/Up - BTC 1 Jun07 47.50 Call @ -3.81 -
04-Jun-07 - Dollar Cost Averaging - BTO 100 WMT @ 51.19 -
04-Jun-07 - Combined Cost Basis - $10,045.00 200 @ 50.23 -
04-Jun-07 - Continued Trade - STO 2 Dec07 52.50 Call @ 2.54 -

Current Position Summary:

Stock Investment: $10,045.00
Income Generated: $196.50
Percent Income Generated: 1.96%
Net Profit If Called: $651.50
Percent Return If Called: 6.49%
Annualized Return If Called: 9.78%
Days to Expiration: 242 days

Trade History:

23-Apr-07 - Initial Stock Position - BTO 100 WMT @ 49.26 - VICC
23-Apr-07 - Continued Trade - STO 1 May07 52.50 Call @ 0.10 - Expired
21-May-07 - Interim Trade - STO 1 Jun07 47.50 Call @ 0.59 - Closed
04-Jun-07 - Buy Back & Roll Out/Up - BTC 1 Jun07 47.50 Call @ -3.81 -
04-Jun-07 - Dollar Cost Averaging - BTO 100 WMT @ 51.19 -
04-Jun-07 - Combined Cost Basis - $10,045.00 200 @ 50.23 -
04-Jun-07 - Continued Trade - STO 2 Dec07 52.50 Call @ 2.54 -

Note that as a VICC position the primary objective is capital appreciation. The stock will be held long term until it reaches or surpasses it's fair value. Front month OTM call options are sold to bring in a small amount of income while waiting for the stock to appreciate. The calls are sold far enough OTM to avoid assignment and the need to make any mid-month adjustments.