Wednesday, June 25, 2008

Humana and Microsoft -- Continuation Transactions

1. Humana (HUM) Continuation Transaction

The following transaction was made today to establish a covered calls position against the 200 shares of HUM:
06/25/08 Covered Calls Continuation Transaction -- STO 2 Jul08 45 Calls @ $.65

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.
06/21/08 Jun08 Options Expired
06/25/08 Covered Calls Continuation Transaction -- STO 2 Jul08 45 Calls @ $.65
Note: Price of HUM was $41.95 when the calls were sold today.
The overall performance results(including commissions)for the HUM transactions through the Jul08 expiration would be as follows:

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

Net Profit:
(a) Options Income: $1,682.75 (200*($2.20+$1.25+$2.10+2.50+$.65 - 5*$11.45 commissions)
(b) Dividend Income: $0
(c) Capital Appreciation(If exercised): -$4,667.90
= ($45.00-$68.65)*200 - 2*$8.95 commissions

Total Net Profit(If stock price exercised): -$2,985.15
= (+$1,682.75+$0-$4,667.90)

Annualized Return If Exercised (ARIE) -52.9%
(-$2,985.15/$13,739.95)*(365/150 days)


2. Microsoft (MSFT) Continuation Transaction

The following transaction was made today to establish a covered calls position against the 1000 shares of MSFT:
06/25/08 Covered Calls Continuation Transaction -- STO 10 Jul08 29 Calls @ $.60

04/22/08 Initial Stock Purchase Transaction -- Bought 1000 MSFT @ $30.02
04/22/08 Initial Calls Sold Transaction -- Sold 10 MSFT May08 $31 Calls @ $.82
05/13/08 Ex-Dividend Date -- $.110 per share
05/17/08 May08 Options Expired
06/25/08 Covered Calls Continuation Transaction -- STO 10 Jul08 29 Calls @ $.60

Note: Price of MSFT was $28.40 when the calls were sold today.
The overall performance results(including commissions)for the MSFT transactions through the Jul08 expiration would be as follows:

Stock Purchase Cost: $30,028.95
($30.02*1000+$8.95 commission)

Net Profit:
(a) Options Income: $1,387.10 (1000*($.82+$.60 - 2*$16.45 commissions)
(b) Dividend Income: $110 (1000 shares * $.110)
(c) Capital Appreciation(If exercised): -$1,037.90
= ($29.00-$30.02)*1000 - 2*$8.95 commissions

Total Net Profit(If stock price exercised): +$459.20
= (+$1,387.10+$110.00-$1,037.90)

Annualized Return If Exercised (ARIE) +6.3%
(+$459.20/$30,028.95)*(365/88 days)

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