I wrote a Nov 16 $30.00 covered call option on Husky Energy Inc (HSE.TO) last month and collected a premium. This option expired in-the-money with Husky’s Friday closing price of $30.89 and was exercised closing my position in HSE.
The timing was interesting as Goldman Sachs changed their “sell” rating to “neutral” a couple of days after I wrote the options, raising the price target to $35.00. This caused the stock prices to rise (although they did fall back down a bit for a couple of weeks after that) and instead of buying back the call I had written, I let it expire as I had been thinking of selling this stock anyway.
I held HSE for approximately 3 years and generate a decent amount of passive income from it where my yield-on-cost was 4.20%. However, due to stagnant dividend growth, I wanted to sell the stock. Instead, I decided to try generating more income with the risk of being called to sell – which is what this turned out to be. I have no regrets on the option being called since I made a good profit on the investment and am leaving happy.
About Husky Energy (from Google Finance):
Husky Energy Inc. (Husky) is an international integrated energy company. Husky operates in three segments: Upstream, Midstream and Downstream. Upstream includes exploration for, development and production of crude oil, bitumen, natural gas and natural gas liquids. Midstream includes marketing of the Company’s and other producers’ crude oil, natural gas, natural gas liquids, sulphur and petroleum coke, pipeline transportation and processing of heavy crude oil and natural gas, storage of crude oil, diluents and natural gas and cogeneration of electrical and thermal energy. Downstream includes upgrading of heavy crude oil feedstock into synthetic crude oil, refining in Canada of crude oil and marketing of refined petroleum products, including gasoline, diesel, ethanol blended fuels, asphalt and ancillary products, and production of ethanol and refining in the United States of crude oil to produce and market gasoline, jet fuel and diesel fuels that meet United States clean fuels standards.