Update for the Encana position. Yesterday I read about ECA's CEO wanting to do something radical with the company, which can include cutting the dividend once again and analysis believe that it may be cut in half (from 20 cents to 10 cents). Even though the company has strong cash flows and the current payout ratio is around 28% which isn't that high when compared it to other companies. For this TFSA position in Encana I can handle political risks (US budgeting/ debt ceilings, etc)  but, having a CEO wanting to be radical is a little too much and it'll making it difficult to project a forward share price.

There are a number of choices that are before me.
A) Do nothing (the easiest choice)

B) Sell at the current price, as of writing this update the share price has jumped up from earlier this morning and is now trading at $18.83 (up 2.4%). If I sold here I would have a small loss of 32 cents per share or $180 (net). Still won't be a bad return for the year on this position, roughly 12%.

C) Sell a covered call that is in the money. Looking at what is available, I see, the April $17 options on the Montreal exchange as a good hold at this time with the option premium at $2.10. By taking this position I am locking in the total return of $19.10 per share and it would be called away if the share price remains over $17. The covered call caps me upper end due to the contract price.
To protect my position from a (possible) halving of the dividend in the near term. I believe it to be prudent to buy a Put option. On the Montreal exchange, the January $17 options are trading at .37 cents per share. By buying this position it'll protect my Encana shares from a decline in it's share price (under $17). If we compare it to the cutting of the dividend in 2009, which was in half (40 cents to 20 cents), the share price followed and it too was halved in short order. At 37 cents for the Put premium I believe that this low price gives reasonable protection if the shares of ECA are sliced in half again following a dividend cut. But this all depends if ECA's CEO makes that move to cut a portion of the dividend.

Which of the three would you choose?

I have chosen to follow C) I have completed both the sell (call) and the buy (put) today.

I had sold ECA Apr Call, $17 and collected the premium of $2.10 per share, netting $1033.76
And buying ECA Jan Put, $17 and paid the premium of .37 cent each, $201.24 (net)

As of this update I have collected to date $304.80 in dividends and $1792.56 in option premiums. For a total of $2097.36 (net) this works out to 21.88 %.
The percent showing is of today, it will be different if I hold both open options till January and April expiries.