Continuation -- Citigroup Inc. Covered Calls

Upon Apr2013 options expiration, the 100% cash-secured puts position in Citigroup Inc. (Ticker Symbol C) expired with the stock closing at $48.22 which was below the $49.00 strike price.  So, 700 shares of Citigroup were assigned to the Covered Calls Advisor Portfolio.  Today, a covered calls position was established at the $49.00 strike price by selling 7 May2014 $49.00 call options.  As detailed below, this investment will provide an overall +3.0% absolute return in 54 days (which is equivalent to a +20.3% annualized return) if the stock closes at or above the $49.00 strike price at options expiration on May 16th.
The details of the associated transactions and a potential return-on-investment result are as follows:

1. Citigroup Inc. (C)
The transactions are as follows:

3/24/2014 Sold 7 Apr2014 $49.00 Puts @ $.89

Note: The price of Citi was $50.03 when this transaction was executed.
4/19/2014 Seven Citigroup Put options expired
Note: The price of Citi was $48.22 upon Apr2014 options expiration
4/22/2014 Sold 7 Citigroup May2014 $49.00 call options at $.62 to establish a covered calls position
Note: The price of Citi was $48.28 when these Call options were sold

Two possible overall performance results (including commissions) would be as follows:

100% Cash-Secured Cost Basis: $34,300.00
= $49.00*700

Net Profit:

(a) Options Income: +$1,028.60

= ($.89 + $.62)*700 shares - 2*$14.20 commissions

(b) Dividend Income: +$0.00

(c) Capital Appreciation (If C remains unchanged at current price of $48.28 upon May2014 expiration): -$504.00

= ($48.28-$49.00)*700 shares; OR
(c) Capital Appreciation (If C closes above the $49.00 strike price at May2014 options expiration): $0.00
= ($49.00-$49.00)*700 shares

Total Net Profit (If Citi remains unchanged at current $48.28 price upon May2014 expiration): +$524.60 

= (+$1,028.60 +$0.00 -$504.00)

Total Net Profit (If Citi is above $49.00 strike price at May2014 options expiration): +$1,028.60 

= (+$1,028.60 +$0.00 +$0.00)

1.  If Citi remains unchanged at current $48.28 stock price upon May2014 options expiration:
Absolute Return: +1.5%
= +$524.60/$34,300.00
Equivalent Annualized Return: +10.3%
= (+$524.60/$34,300.00)*(365/54 days)

2. If Citi closes above $49.00 strike price upon May2014 options expiration:
Absolute Return: +3.0%
= +$1,028.60/$34,300.00
Equivalent Annualized Return: +20.3%
= (+$1,028.60/$34,300.00)*(365/54 days)

April 2014 Expiration Results

The Covered Calls Advisor Portfolio (CCAP) contained five positions with April 2014 expirations.  All five positions were established as short Put options.
The Covered Calls Advisor does not use margin, so the detailed information on these five positions reflects the fact that they were established using 100% cash securitization for all five positions.
The results for these five positions so far are as follows:

- Four of the five positions (Freeport McMoran Copper and Gold Inc., Hertz Global Holdings Inc., Intel Corp., and iShares MSCI South Korea ETF) were closed out at expiration. This was the optimal result for these positions in that the maximum potential return-on-investment (ROI) results were actually achieved from when the April short Put option positions were established.  The annualized ROIs for these four closed positions are:
Freeport McMoran Copper and Gold Inc. = +1.4% absolute return (equivalent to +18.8% annualized return for the 27 day holding period)
Hertz Global Holdings Inc. = +2.0% absolute return (equivalent to +27.5% annualized return for the 27 day holding period)
Intel Corporation = +2.0% absolute return (equivalent to +26.5% annualized return for the 27 day holding period)
iShares MSCI South Korea ETF = +1.2% absolute return (equivalent to +16.6% annualized return for the 27 day holding period)

The detailed transactions history and results for each of these four closed positions is detailed below. The cash available from the closing of these positions will be retained in the Covered Calls Advisor Portfolio until new covered calls and/or 100% cash-secured puts positions are established (most likely in the next week or two). These transactions will be posted on this blog the same day they occur.

- One of the five positions (Citigroup Inc.) ended at expiration with the price of the stock at $48.22 which was below the $49.00 strike price.  So the seven Citigroup Put options were exercised and 700 shares of Citigroup were purchased at $49.00.  A decision will be made early this week to either sell these shares or to establish a covered calls positions by selling May2014 call options against the current long stock holdings. When these decisions are made and the accompanying transactions are completed, a post will be made on this blog on the same day with the transaction details to-date.

Details of the four closed transactions and their associated return-on-investment results are as follows:

1.  Freeport McMoran Copper and Gold Inc. (FCX) -- Closed
The transactions were as follows:
3/24/2014 Sold 6 Apr2014 $30.00 Puts @ $.44
Note: The price of FCX was $31.51 when this transaction was executed.
4/19/2014 Six FCX Put options expired
Note: The price of FCX was $33.01 upon April 2014 expiration

The performance result (including commissions) for this FCX position was as follows:
100% Cash-Secured Cost Basis: $18,000.00
= $30.00*600

Net Profit:
(a) Options Income: +$250.55
= ($.44*600 shares) - $13.45 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation: +$0.00
= ($30.00-$30.00)*600 shares

Total Net Profit (FCX closed above the $30 strike price for April 2014 options expiration): +$250.55  = (+$250.55 +$0.00 +$0.00)

Absolute Return: +1.4%
= +$250.55/$18,000.00
Annualized Return: +18.8%
= (+$250.55/$18,000.00)*(365/27 days)


2.   Hertz Global Holdings Inc. (HTZ) -- Closed 
The transactions were as follows:
3/24/2014 Sold 7 Apr2014 $26.00 Puts @ $.55
Note: The price of HTZ was $26.76 when this transaction was executed.
4/19/2014 Seven HTZ Put options expired
Note: The price of HTZ was $28.07 upon April options expiration

The performance result (including commissions) for this HTZ position was as follows:
100% Cash-Secured Cost Basis: $18,200.00
= $26.00*700

Net Profit:
(a) Options Income: +$370.80
= ($.55*700 shares) - $14.20 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation: +$0.00
= ($26.00-$26.00)*700 shares

Total Net Profit (HTZ closed above the $26.00 strike price at Apr2014 options expiration): +$370.80
= (+$370.80 +$0.00 +$0.00)

Absolute Return: +2.0%
= +$370.80/$18,200.00
Annualized Return: +27.5%
= (+$370.80/$18,200.00)*(365/27 days)


3.   Intel Corporation (INTC) -- Closed 
The transactions were as follows:
3/24/2014 Sold 7 Apr2014 $25.00 Puts @ $.51
Note: The price of Intel was $25.11 when this transaction was executed.
4/19/2014 Seven Intel April 2014 Put options expired
Note: The price of Intel was $27.04 upon April 2014 options expiration

The overall performance result (including commissions) for this INTC position was as follows:
100% Cash-Secured Cost Basis: $17,500.00
= $25.00*700

Net Profit:
(a) Options Income: +$342.80
= ($.51*700 shares) - $14.20 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation: +$0.00
= ($25.00-$25.00)*700 shares

Total Net Profit (Intel closed above $25.00 strike price at Apr2014 options expiration): +$342.80
= (+$342.80 +$0.00 +$0.00)

Absolute Return: +2.0%
= +$342.80/$17,000.00
Annualized Return: +26.5%
= (+$342.80/$17,000.00)*(365/27 days)
 

4.   iShares MSCI South Korea ETF (EWY) -- Closed
The transactions were as follows:
3/24/2014 Sold 4 Apr2014 $58.00 Puts @ $.74
Note: The price of EWY was $58.95 when this transaction was executed.
4/19/2014 Four EWY Apr2014 Put options expired
Note: The price of EWY was $63.69 upon Apr2014 options expiration

The overall performance result (including commissions) for this EWY position was as follows:
100% Cash-Secured Cost Basis: $23,200.00
= $58.00*400

Net Profit:
(a) Options Income: +$284.05
= ($.74*400 shares) - $11.95 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation: +$0.00
= ($58.00-$58.00)*400 shares

Total Net Profit (EWY closed above $58.00 strike price upon Apr2014 options expiration): +$284.05
= (+$284.05 +$0.00 +$0.00)

Absolute Return: +1.2%
= +$284.05/$23,200.00
Annualized Return: +16.6%
= (+$284.05/$23,200.00)*(365/27 days)

Established Five New Positions for April 2014 Expiration

The Covered Calls Advisor has established five new positions in Citigroup Inc.(ticker symbol C), Freeport McMoran Copper and Gold Inc.(ticker FCX), Hertz Global Holdings Inc.(ticker HTZ), Intel Corporation (ticker INTC), and iShares MSCI South Korea ETF (ticker EWY).  All five positions are established as 100% Cash-Secured Put Options with April 2014 options expirations. 

The Covered Calls Advisor does not use margin, so the potential results shown below reflect the fact that these positions were established using 100% cash securitization for the Put options positions sold.     

As we know, Covered Calls and 100% Cash-Secured Puts are synthetically equivalent positions when established at the same strike price and same expiration date.  Details for each position are provided below. In each case, conservative positions were established at strike prices below the current market price of the equities.

1. Citigroup Inc. (C)
The transaction is as follows:

3/24/2014 Sold 7 Apr2014 $49.00 Puts @ $.89

Note: The price of Citi was $50.03 when this transaction was executed.

A possible overall performance results (including commissions) for this Citigroup transaction would be as follows:

100% Cash-Secured Cost Basis: $34,300.00
= $49.00*700

Net Profit:

(a) Options Income: +$608.80

= ($.89*700 shares) - $14.20 commissions

(b) Dividend Income: +$0.00

(c) Capital Appreciation (If C remains above $49.00 at Apr2014 expiration): +$0.00

= ($49.00-$49.00)*700 shares

Total Net Profit (If Citi is above $49.00 strike price at Apr2014 options expiration): +$608.80 

= (+$608.80 +$0.00 +$0.00)

Absolute Return (If C closes above $49.00 at Apr2014 options expiration and Put options thus expire worthless): +1.8%
= +$608.80/$34,300.00

Annualized Return (If C above $49.00 at expiration): +24.0%

= (+$608.80/$34,300.00)*(365/27 days)

The downside 'breakeven price' at expiration is at $48.11 ($49.00 - $.89).  This is the price at which this 100% cash-secured Puts investment would make neither a profit or a loss.

The 'crossover price' at expiration is $50.92 (50.03 + $.89). This is the price above which it would have been more profitable to simply buy-and-hold Citigroup Inc. stock until April 18th (the Apr2014 options expiration date) rather than holding the short Put options.

2. Freeport McMoran Copper and Gold Inc. (FCX)
The transaction is as follows:
3/24/2014 Sold 6 Apr2014 $30.00 Puts @ $.44
Note: The price of FCX was $31.51 when this transaction was executed.

A possible overall performance results(including commissions) for this FCX transaction would be as follows:
100% Cash-Secured Cost Basis: $18,000.00 = $30.00*600

Net Profit:
(a) Options Income: +$250.55
= ($.44*600 shares) - $13.45 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If FCX remains above $30.00 at Apr2014 expiration): +$0.00
= ($30.00-$30.00)*600 shares

Total Net Profit (If FCX is above $30.00 strike price at Apr2014 options expiration): +$250.55  = (+$250.55 +$0.00 +$0.00)

Absolute Return (If FCX is above $30.00 at Apr2014 options expiration and Put options thus expire worthless): +1.4%
= +$250.55/$18,000.00
Annualized Return (If FCX above $30.00 at expiration): +18.8%
= (+$250.55/$18,000.00)*(365/27 days)

The downside 'breakeven price' at expiration is at $29.56 ($30.00 - $.44).
The 'crossover price' at expiration is $31.95 ($31.51 + $.44). This is the price above which it would have been more profitable to simply buy-and-hold FCX until April 18th (the Apr2014 options expiration date) rather than investing in the short Put options.


3.  Hertz Global Holdings Inc. (HTZ)

The transactions were as follows:
3/24/2014 Sold 7 Apr2014 $26.00 Puts @ $.55

Note: The price of HTZ was $26.76 when this transaction was executed.

A possible overall performance results(including commissions) for this HTZ transaction would be as follows:
100% Cash-Secured Cost Basis: $18,200.00 = $26.00*700

Net Profit:
(a) Options Income: +$370.80
= ($.55*700 shares) - $14.20 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If HTZ remains above $26.00 at Apr2014 expiration): +$0.00
= ($26.00-$26.00)*700 shares

Total Net Profit (If HTZ is above $26.00 strike price at Apr2014 options expiration): +$370.80 
= (+$370.80 +$0.00 +$0.00)

Absolute Return (If HTZ is above $26.00 at Apr2014 options expiration and Put options thus expire worthless): +2.0%
= +$370.80/$18,200.00
Annualized Return (If HTZ closes above $26.00 at expiration): +27.5%
= (+$370.80/$18,200.00)*(365/27 days)

The downside 'breakeven price' at expiration is at $25.45 ($26.00 - $.55).
The 'crossover price' at expiration is $27.31 ($26.76 + $.55). This is the price above which it would have been more profitable to simply buy-and-hold HTZ until April 18th (the Apr2014 options expiration date) rather than investing in the short Put options.


4.  Intel Corporation (INTC)

The transaction is as follows:

3/24/2014 Sold 7 Apr2014 $25.00 Puts @ $.51

Note: The price of Intel was $25.11 when this transaction was executed.

A possible overall performance results (including commissions) for this INTC transaction would be as follows:

100% Cash-Secured Cost Basis: $17,500.00
= $25.00*700

Net Profit:

(a) Options Income: +$342.80

= ($.51*700 shares) - $14.20 commissions

(b) Dividend Income: +$0.00

(c) Capital Appreciation (If INTC remains above $25.00 at Apr2014 expiration): +$0.00

= ($25.00-$25.00)*700 shares

Total Net Profit (If Intel closes above $25.00 strike price at Apr2014 options expiration): +$342.80 

= (+$342.80 +$0.00 +$0.00)

Absolute Return (If INTC closes above $25.00 at Apr2014 options expiration and Put options thus expire worthless): +2.0%
= +$342.80/$17,000.00

Annualized Return (If INTC above $25.00 at expiration): +26.5%
= (+$342.80/$17,000.00)*(365/27 days)

The downside 'breakeven price' at expiration is at $24.49 ($25.00 - $.51).  This is the price at which this 100% cash-secured Puts investment would make neither a profit or a loss.

The 'crossover price' at expiration is $25.62 (25.11 + $.51). This is the price above which it would have been more profitable to simply buy-and-hold Intel Corp. stock until April 18th (the Apr2014 options expiration date) rather than holding the short Put options.

5.  iShares MSCI South Korea ETF (EWY)

The transactions were as follows:
3/24/2014 Sold 4 Apr2014 $58.00 Puts @ $.74
Note: The price of EWY was $58.95 when this transaction was executed.

A possible overall performance results(including commissions) for this EWY transaction would be as follows:
100% Cash-Secured Cost Basis: $23,200.00
= $58.00*400

Net Profit:
(a) Options Income: +$284.05
= ($.74*400 shares) - $11.95 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If EWY remains above $58.00 at Apr2014 expiration): +$0.00
= ($58.00-$58.00)*400 shares

Total Net Profit (If EWY is above $58.00 strike price at Apr2014 options expiration): +$284.05 
= (+$284.05 +$0.00 +$0.00)

Absolute Return (If EWY is above $58.00 at Apr2014 options expiration and Put options thus expire worthless): +1.2%
= +$284.05/$23,200.00

Annualized Return (If EWY above $58.00 at expiration): +16.6%
= (+$284.05/$23,200.00)*(365/27 days)

The downside 'breakeven price' at expiration is at $57.26 ($58.00 - $.74).
The 'crossover price' at expiration is $59.69 ($58.95 + $.74). This is the price above which it would have been more profitable to simply buy-and-hold FCX until April 18th (the Apr2014 options expiration date) rather than investing in the short Put options.

March 2014 Expiration Results

The Covered Calls Advisor Portfolio (CCAP) contained three positions with March 2014 expirations. A summary of the results is as follows:

- Two of the three positions (Citigroup Inc. and Noble Corporation) were closed out at expiration. This was the optimal result for these positions in that the maximum potential return-on-investment (ROI) results from when the March positions were established were actually achieved. The annualized ROIs for these two closed positions are:
Citigroup Inc. = +1.9% absolute return (equivalent to +26.8% annualized return for the 26 ay holding period)
Noble Corp. = -8.4% absolute return (equivalent to -22.3% annualized return for the 137 day holding period)
The detailed transactions history and results for each of the two closed positions is detailed below. The cash available from the closing of these positions will be retained in the Covered Calls Advisor Portfolio until new covered calls and/or 100% cash-secured puts positions are established (most likely in the next week or two). These transactions will be posted on this blog the same day they occur.

- One of the three positions ended at expiration with long stock positions (Agnico Eagle Mines Ltd.).  The six Agnico Eagle Mines covered calls had its options expire since the stock price closed Friday at $32.36, below the Mar2014 options' $35.00 strike price. So, the Covered Calls Advisor Portfolio (CCAP) continues to own 600 long shares in Agnico Eagle.  A decision will be made early this week to either sell these shares or to continue with covered calls positions by selling Apr2014 call options against the current long stock holdings. When these decisions are made and the accompanying transactions are completed, a post will be made on this blog on the same day with the transaction details.

Details of the transactions and associated return-on-investment results for the two closed positions are as follows:

1. Citigroup Inc. (C) -- Closed
The transactions were as follows:
02/25/2013 Sold 6 Mar2014 $48.00 Puts @ $.94
Note: The price of Citigroup was $48.46 when this transaction was executed.
03/21/2014 The 6 put options expired
Note: the price of Citigroup was $50.08 upon Mar2014 options expiration.

The Covered Calls Advisor does not use margin, so the detailed information on this position reflects the fact that this position was established using 100% cash securitization for the six Put options sold.

The overall performance result (including commissions) for this Citigroup Inc. transaction was as follows:
100% Cash-Secured Cost Basis: $28,800.00 = $48.00*600

Net Profit:
(a) Options Income: +$550.55
= ($.94*600 shares) - $13.45 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (Citi was above $48.00 strike price at Mar2014 expiration): +$0.00
= ($48.00-$48.00)*600 shares

Total Net Profit (C closed above $48.00 strike price at Mar2014 options expiration):+$550.55 
= (+$550.55 +$0.00 +$0.00)

Absolute Return: +1.9%
= +$550.55/$28,800.00
Annualized Return: +26.8%
= (+$550.55/$28,800.00)*(365/26 days)

2.  Noble Corporation (NE): Closed
The transactions were as follows:
11/04/2013 Sold 3 Dec2013 $37.00 Noble Corp 100% Cash-Secured Put Options @ $1.24
Note: the price of NE was $37.32 when these options were sold
12/20/2013 Purchased 300 NE shares assigned at $37.00 strike price
Note: the price of NE was $36.32 at Dec2013 options expiration
12/31/2013 Sold 3 Jan2014 $37.00 Noble Corp Call Options @ $.80
Note: the price of NE was $36.97 when these options were sold
1/17/2014 Jan2014 $37.00 Noble Corp call options expired
Note: price of NE was $35.39 when these options expired
2/25/2014 Sold 3 Mar2014 $31.00 Noble Corp call options @ $1.00
Note: price of NE was $31.33 when these options were sold
03/21/2014 Sold 300 NE at $31.00 Mar2014 strike price
Note: the price of NE was $31.62 at Mar2014 options expiration.
The overall performance result (to-date including commissions) for these Noble Corp covered calls was as follows:
Stock Purchase Cost: $11,108.95
= ($37.00*300+$8.95 commission)

Net Profit:
(a) Options Income: +$878.40
= 300*($1.24+$.80+$1.00) - 3*$11.20 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (if assigned at $31.00) = -$1,808.95
= ($31.00-$37.00)*300 - $8.95 commissions

Total Net Profit (if assigned at Mar2014 expiration): -$930.55
= (+$878.40 +$0.00 -$1,808.95)

Absolute Return (if assigned): -8.4%
= -$930.55/$11,108.95
Annualized Return (if assigned at $31.00 at Mar2014 expiration): -22.3%
= (-$930.55/$11,108.95)*(365/137 days)

Established a 100% Cash-Secured Puts Position in Citigroup Inc.

Today, the Covered Calls Advisor established a 100% Cash-Secured Puts position in Citigroup Inc. (Ticker Symbol C) with a Mar2014 expiration and at the $48.00 strike price.  As detailed below, this investment will provide a +1.9% absolute return in 20 days (which is equivalent to a +26.8% annualized return) if Citi stock closes at or above $48.00 at options expiration on Mar 21st.

Details of this transaction along with a potential return-on-investment result are: 

Citigroup Inc. (C)
The transaction is as follows:
02/25/2013 Sold 6 Mar2014 $48.00 Puts @ $.94
Note: The price of Citigroup was $48.46 when this transaction was executed.

The Covered Calls Advisor does not use margin, so the detailed information on this position and some potential results shown below reflect the fact that this position was established using 100% cash securitization for the six Put options sold.

A possible overall performance result (including commissions) for this Citigroup Inc. transaction would be as follows:
100% Cash-Secured Cost Basis: $28,800.00 = $48.00*600
Note:  the price of Citigroup was $48.46 when these Put options were sold.

Net Profit:
(a) Options Income: +$550.55
= ($.94*600 shares) - $13.45 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If C remains above $48.00 at Mar2014 expiration): +$0.00
= ($48.00-$48.00)*600 shares

Total Net Profit (If C is above $48.00 strike price at Mar2014 options expiration):+$550.55 
= (+$550.55 +$0.00 +$0.00)

Absolute Return (If C is above $48.00 at Mar2014 options expiration and Put options thus expire worthless): +1.9%
= +$550.55/$28,800.00
Annualized Return (If C above $48.00 at expiration): +26.8%
= (+$550.55/$28,800.00)*(365/26 days)

The downside 'breakeven price' at expiration is at $47.06 ($48.00 - $.94), which is 2.9% below the current market price of $48.46.
The 'crossover price' at expiration is $48.94 ($48.00 + $.94).  This is the price above which it would have been more profitable to simply buy-and-hold Citigroup stock until Mar 21st (the Mar2014 options expiration date) rather than holding these short Put options.