Thursday, July 24, 2008

Continuation Transaction -- Honeywell Inc.

The following transaction was made today to establish a covered calls position against the 500 shares of HON:
07/24/08 Covered Calls Transaction -- STO 5 Aug08 $52.50 Calls @ $1.38

The Transactions History to date is as follows:
05/23/08 Initial Stock Purchase Transaction -- Bought 500 HON @ $58.89
05/23/08 Initial Calls Sold Transaction -- Sold 5 HON Jun08 $60 Calls @ $1.20
06/20/08 Jun08 Options Expired
07/02/08 Covered Calls Continuation Transaction -- Sold 5 Jul08 $52.50 Calls @ $.85
Note: Price of HON was $50.12 when the calls were sold today.
07/19/08 July08 Options Expired
07/24/08 Covered Calls Continuation Transaction -- Sold 5 HON Aug08 $52.50 Calls @ $1.38
Note: Price of HON was $52.02 when the calls were sold today.

The overall performance results(including commissions) for the HON transactions through the Aug08 expiration would be as follows:
Stock Purchase Cost: $29,453.95
($58.89*500+$8.95 commission)

Net Profit:
(a) Options Income: +$1,676.90 (500*($1.20+$.85+$1.38) - 3*$12.70 commissions)
(b) Dividend Income: +$137.50 ($.275 per share*500 shares ex-div on 8/15/08)
(c) Capital Appreciation (If exercised): -$3,177.10
= ($52.50-$58.89)*500 - 2*$8.95 commissions

Total Net Profit(If stock price exercised at $52.50): -$1,362.70
= (+$1,676.90 +$137.50-$3,177.10)

Annualized Return If Exercised (ARIE) -19.9%
(-$1,362.70/$29,453.95)*(365/85 days)

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