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Wednesday, July 2, 2008

Continuation Transaction -- Honeywell

The following transaction was made today to establish a covered calls position against the 500 shares of HON:
07/02/08 Covered Calls Transaction -- STO 5 Jul08 $52.50 Calls @ $.85

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.

The overall performance results(including commissions) for the HON transactions through the Jul08 expiration would be as follows:
Stock Purchase Cost: $29,453.95
($58.89*500+$8.95 commission)

Net Profit:
(a) Options Income: +$997.60 (500*($1.20+$.85) - 2*$13.70 commissions)
(b) Dividend Income: $0
(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): -$2,179.50
= (+$997.60 +$0 -$3,177.10)

Annualized Return If Exercised (ARIE) -47.4%
(-$2,179.50/$29,453.95)*(365/57 days)

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