Thursday, May 29, 2008

Continuation Transaction -- Humana

The following transaction was made today to establish a covered calls position against the 200 shares of HUM:
05/29/08 Covered Calls Continuation Transaction -- STO 2 Jun08 50 Calls @ $2.50

The Transactions History to date is as follows:
02/20/08 Initial Stock Purchase Transaction -- Bought 200 HUM @ $68.65
02/20/08 Initial Calls Sold Transaction -- Sold 2 HUM Mar08 70 Calls @ $2.20
03/22/08 Mar08 Options Expired
03/24/08 Covered Calls Continuation Transaction -- Sold 2 Apr08 50 Calls @ $1.25
Note: Price of HUM was $46.10 when the calls were sold today.
04/19/08 Apr08 Options Expired
04/28/08 Covered Calls Continuation Transaction -- STO 2 May08 45 Calls @ $2.10
Note: Price of HUM was $45.35 when the calls were sold today.
05/17/08 May08 Options Expired
05/29/08 Covered Calls Continuation Transaction -- STO 2 Jun08 50 Calls @ $2.50
Note: Price of HUM was $50.80 when the calls were sold today.

The overall performance results(including commissions)for the HUM transactions through the Jun08 expiration would be as follows:

Stock Purchase Cost: $13,739.95
($68.65*200+$9.95 commission)

Net Profit:
(a) Options Income: $1,564.20 (200*($2.20+$1.25+$2.10+2.50 - 4*$11.45 commissions)
(b) Dividend Income: $0
(c) Capital Appreciation(If exercised): -$3,747.90
= ($50.00-$68.65)*200 - 2*$8.95 commissions

Total Net Profit(If stock price exercised): -$2,183.70
= (+$1,564.20+$0-$3,747.90)

Annualized Return If Exercised (ARIE) -47.5%
(-$2,183.70/$13,739.95)*(365/122 days)

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