Monday, January 28, 2008

Kinetic Concepts Inc. -- Continuation Transaction

The following transaction was made today to continue the covered calls written against the 400 shares of KCI:
01/28/08 Covered Calls Continuation Transaction -- STO 4 Feb08 50 Calls @ $1.70

The Transactions History to date is as follows:

11/20/07 Initial Stock Position -- Bought 400 KCI @ 59.53
11/20/07 Initial Call Options -- Sold 4 KCI Dec07 60 Calls @ $2.35
12/22/07 Dec07 Option Expiration Date – KCI closed below the strike price at $54.25
12/26/07 Covered Calls Continuation Transaction -- STO 4 Jan08 55 Calls @ $1.95
01/19/08 Jan08 Options Expiration Date -- KCI closed below the strike price
01/28/08 Covered Calls Continuation Transaction -- STO 4 Feb08 50 Calls @ $1.70

The overall performance results(including commissions)for the KCI transactions through Feb08 expiration would be as follows:
Stock Purchase Cost: $23,821.95
($59.53*400+$9.95 commission)

Net Profit:
(a) Options Income: $2,361.15 (400*$2.35 + 400*$1.95 + 400*$1.70 - 3*$12.95 commissions)
(b) Dividend Income: $0
(c) Capital Appreciation (If stock price unchanged from $49.10): -$4,191.90
= ($49.10-$59.53)*400 - 2*$9.95 commissions
(c) Capital Appreciation (If exercised): -$3,831.90
= ($50.00-$59.53)*400 - 2*$9.95 commissions

Total Net Profit(If stock price unchanged at $49.10): -$1,830.75
= ($2,361.15 + $0 - $4,191.90)
Total Net Profit(If stock price exercised at $50): -$1,470.75
= ($2,361.15 + $0 - $3,831.90)

Annualized Return If Unchanged (ARIU) -31.9% (-$1,830.75/$23,821.95)*(365/88)
Annualized Return If Exercised (ARIE) -25.6% (-$1,470.75/$23,821.95)*(365/88)

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