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Wednesday, February 13, 2008

Seagate Technology -- Continuation Transaction

The following transaction was made today to continue the covered calls written against the 800 shares of STX:
02/13/08 Covered Calls Continuation Transaction -- STO 8 Mar08 25 Calls @ $0.45

The Transactions History to date is as follows:

12/26/07 Bought 800 STX @ 25.84
12/26/07 Initial Call Options -- Sold 8 STX Jan08 27.5 Calls @ $.55
01/19/08 Jan08 Options Expiration Date -- STX closed below the strike price
01/30/08 Ex-Dividend Date $.100 * 800 shares = $80 dividend income
02/13/08 Covered Calls Continuation Transaction -- STO 8 Mar08 25 Calls @ $0.45

The overall performance results (including commissions) for the STX transactions through Mar08 expiration would be as follows:
Stock Purchase Cost: $20,681.95
($25.84*800+$9.95 commission)

Net Profit:
(a) Options Income: $768.10 (800*$.55 + 800*$.45 - 2*$15.95 commissions)
(b) Dividend Income: $80.00 ($.100 dividend * 800 shares)
(c) Capital Appreciation (If stock price unchanged from $23.12): -$2,203.90
= ($23.12 - $25.84)*800 - 2*$9.95 commissions
(c) Capital Appreciation (If exercised): -$691.90
= ($25.00-$25.84)*800 - 2*$9.95 commissions

Total Net Profit(If stock price unchanged at $23.12): -$1,355.80
= ($768.10 + $80.00 - $2,203.90)
Total Net Profit(If stock price exercised at $25): +$156.20
= ($768.10 + $80.00 - $691.90)

Annualized Return If Unchanged (ARIU) -27.5% (-$1,355.80/$20,681.95)*(365/87)
Annualized Return If Exercised (ARIE) + 3.2% (+$156.20/$20,681.95)*(365/87)

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