BLACKROCK ENHANCED DIVIDEND ACHIEVERS

Today I purchased more shares of BlackRock Enhanced Dividend Achievers (BDJ) at $11.80 per share. The BlackRock Enhanced Dividend Achievers Trust, BDJ, is a closed-end equity fund. It currently yields a 10.48 percent dividend at today's price. It also trades at a 12 percent discount to it's underlying stock holdings. The high yields are enabled by writing call options.
A call option on a stock gives the buyer the right to buy 100 shares of a stock at a pre-determined price (strike price), for a pre-determined period of time (expiration date). The fund only writes covered calls, which means they own the stock and are selling the option to someone else to buy the stock for a premium. In a covered call strategy, the risk of loss on the option is zero. If the stock increases above the strike price of the call, the investor simply delivers the shares of the stock to the call buyer. The investor gives up some upside on the stock position in return for risk-free option income. The nice part of this strategy is if the stock goes down or stays the same within the expiration date the seller of the call keeps the premium and can write another call, thus the extra income.
BDJ's top ten holdings are Chevron, AT&T, GE, Bank of America, and Pfizer.