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Thursday, July 10, 2008

Continuation Transaction -- Travelers Cos. Inc.

The following transaction was made today to establish a covered calls position against the 500 shares of TRV:
07/10/08 Covered Calls Transaction -- STO 5 Jul08 $45.00 Calls @ $.80

The Transactions History to date is as follows:
05/22/08 Initial Stock Purchase Transaction -- Bought 500 TRV @ $49.28
06/05/08 Initial Calls Sold Transaction -- Sold 5 TRV Jun08 $50 Calls @ $.85
06/20/08 Jun08 Options Expired
07/10/08 Covered Calls Continuation Transaction -- Sold 5 Jul08 $45.00 Calls @ $.80
Note: Price of TRV was $44.50 when the calls were sold today.

The overall performance results(including commissions) for the TRV transactions through the Jul08 expiration would be as follows:
Stock Purchase Cost: $24,648.95
($49.28*500+$8.95 commission)

Net Profit:
(a) Options Income: +$797.60 (500*($.85+$.80) - 2*$13.70 commissions)
(b) Dividend Income: $0
(c) Capital Appreciation (If exercised): -$2,157.90
= ($45.00-$49.28)*500 - 2*$8.95 commissions

Total Net Profit(If stock price exercised at $45.00): -$1,360.30
= (+$797.60 +$0 -$2,157.90)

Annualized Return If Exercised (ARIE) -34.7%
(-$1,360.30/$24,648.95)*(365/58 days)

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