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Tuesday, January 29, 2008

Herbalife -- Continuation Transaction

The following transaction was made today to continue the covered calls written against the 500 shares of HLF:
01/29/08 Covered Calls Continuation Transaction -- STO 5 Feb08 40 Calls @ $1.60

The Transactions History to date is as follows:
12/26/07 Bought 500 HLF @ 39.32
12/26/07 Sold 5 HLF Jan08 40 Calls @ $1.40
01/19/08 Jan08 Options Expiration Date -- HLF closed below the strike price at $39.81
01/29/08 Covered Calls Continuation Transaction -- STO 5 Feb08 40 Calls @ $1.60

The overall performance results(including commissions)for the HLF transactions through Feb08 expiration would be as follows:
Stock Purchase Cost: $19,669.95
($39.32*500+$9.95 commission)

Net Profit:
(a) Options Income: $1,472.60 (500*$1.40 + 500*$1.60 - 2*$13.70 commissions)
(b) Dividend Income: $0
(c) Capital Appreciation (If exercised): +$320.10
= ($40.00-$39.32)*500 - 2*$9.95 commissions
Note that the stock price was slightly in-the-money today at $40.07 when the transaction was made.

Total Net Profit(If stock price exercised at $40): +$1,792.70
= ($1,472.60 + $0 + $320.10)


Annualized Return If Exercised (ARIE)= +64.0% (+$1,792.70/$19,669.95)*(365/52)

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