Wednesday, July 23, 2008

Continuation Transactions -- Accenture, EMCOR Group, Hewlett-Packard, Humana, Microsoft, and Travelers

Today, covered calls positions were established against six companies already owned in the Covered Calls Advisor Portfolio(CCAP). As shown by the transactions history below, the Jul08 options expired worthless and new options were sold today to establish Aug08 covered call positions in each instance.

1. Accenture (ACN) Continuation Transaction
05/23/08 Initial Stock Purchase Transaction -- Bought 500 ACN @ $36.70
05/27/08 Initial Calls Sold Transaction -- Sold 5 ACN Jul08 $40 Calls @ $.80
07/19/08 July08 Options Expired
07/23/08 Covered Calls Continuation Transaction -- Sold 5 ACN Aug08 $40 Calls @ $1.40

The overall performance results(including commissions)for the ACN transactions through the Aug08 expiration would be as follows:

Stock Purchase Cost: $18,358.95
($36.70*500+$8.95 commission)

Net Profit:
(a) Options Income: +$1,074.60 (500*($.80+$1.40) - 2*$12.70 commissions)
(b) Dividend Income: $0
(c) Capital Appreciation(If exercised): +$1,632.10
= ($40.00-$36.70)*500 - 2*$8.95 commissions

Total Net Profit(If stock price exercised): +$2,706.70
= (+$1,074.60+$0+$1,632.10)

Annualized Return If Exercised (ARIE) +63.3%
(+$2,706.70/$18,358.95)*(365/85 days)

2. EMCOR Holdings (EME) Continuation Transaction
07/02/08 Initial Stock Purchase Transaction -- Bought 500 EME @ $26.64
07/02/08 Initial Calls Sold Transaction -- Sold 5 EME Jul08 $27.50 Calls @ $.70
07/19/08 July08 Options Expired
07/23/08 Covered Calls Continuation Transaction -- Sold 5 EME Aug08 $27.50 Calls @ $1.25
The overall performance results(including commissions)for the EME transactions through the Aug08 expiration would be as follows:

Stock Purchase Cost: $13,328.95
($26.64*500+$8.95 commission)

Net Profit:
(a) Options Income: +$949.60 (500*($.70+$1.25) - 2*$12.70 commissions)
(b) Dividend Income: $0
(c) Capital Appreciation(If exercised): +$412.10
= ($27.50-$26.64)*500 - 2*$8.95 commissions

Total Net Profit(If stock price exercised): +$1,361.70
= (+$949.60+$0+$412.10)

Annualized Return If Exercised (ARIE) +82.9%
(+$1,361.70/$13,328.95)*(365/45 days)


3. Hewlett-Packard (HPQ) Continuation Transaction
07/08/08 Initial Stock Purchase Transaction -- Bought 400 HPQ @ $43.74
07/08/08 Initial Calls Sold Transaction -- Sold 4 HPQ Jul08 $45.00 Calls @ $.50
07/19/08 July08 Options Expired
07/23/08 Covered Calls Continuation Transaction -- Sold 4 HPQ Aug08 $45.00 Calls
@ $.85
The overall performance results(including commissions)for the HPQ transactions through the Aug08 expiration would be as follows:

Stock Purchase Cost: $21,878.95
($43.74*400+$8.95 commission)

Net Profit:
(a) Options Income: +$649.60 (500*($.50+$.85) - 2*$12.70 commissions)
(b) Dividend Income: $0
(c) Capital Appreciation(If exercised): +$486.10
= ($45.00-$43.74)*400 - 2*$8.95 commissions

Total Net Profit(If stock price exercised): +$1,135.70
= (+$649.60+$0+$486.10)

Annualized Return If Exercised (ARIE) +48.6%
(+$1,135.70/$21,878.95)*(365/39 days)


4. Humana (HUM) Continuation Transaction
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.
07/19/08 July08 Options Expired
07/23/08 Covered Calls Continuation Transaction -- Sold 2 HUM Aug08 $45.00 Calls
@ $1.30
The overall performance results(including commissions)for the HUM transactions through the Aug08 expiration would be as follows:

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

Net Profit:
(a) Options Income: +$1,937.30 (200*($2.20+$1.25+$2.10+2.50+$.65+1.30 - 6*$10.45 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): -$2,730.60
= (+$1,937.30+$0-$4,667.90)

Annualized Return If Exercised (ARIE) -40.8%
(-$2,730.60/$13,739.95)*(365/178 days)


5. Microsoft (MSFT) Continuation Transaction
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
07/19/08 July08 Options Expired
07/23/08 Covered Calls Continuation Transaction -- Sold 10 MSFT Aug08 $27.00 Calls
@ $.49
The overall performance results(including commissions)for the MSFT transactions through the Aug08 expiration would be as follows:

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

Net Profit:
(a) Options Income: +$1,860.65 (1000*($.82+$.60+$.49 - 3*$16.45 commissions)
(b) Dividend Income: $110 (1000 shares * $.110)
(c) Capital Appreciation(If exercised): -$3,037.90
= ($27.00-$30.02)*1000 - 2*$8.95 commissions

Total Net Profit(If stock price exercised): -$1,287.25
= (+$1,860.65+$110.00-$3,037.90)

Annualized Return If Exercised (ARIE) -13.5%
(-$1,287.25/$30,028.95)*(365/116 days)


6. Travelers Companies (TRV) Continuation Transaction
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
06/06/08 Ex-Dividend Payment of $150.00 ($.30 per share x 500 shares)
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.
07/19/08 July08 Options Expired
07/23/08 Covered Calls Continuation Transaction -- Sold 5 TRV Aug08 $45.00 Calls
@ $1.85
The overall performance results(including commissions)for the TRV transactions through the Aug08 expiration would be as follows:

Stock Purchase Cost: $24,648.95
($49.28*500+$8.95 commission)

Net Profit:
(a) Options Income: +$1,711.90 (500*($.85+$.80+$1.85) - 3*$12.70 commissions)
(b) Dividend Income: +$150.00
(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): -$296.00
= (+$1,711.90 +$150.00 -$2,157.90)

Annualized Return If Exercised (ARIE) -5.1%
(-$296.00/$24,648.95)*(365/86 days)

3 comments:

  1. Is this real money or are you testing this with a dummy account?

    ReplyDelete
  2. This is not real money. I make these trades in a virtual account administered by CBOE and run by Options Express. However, I do own all of these positions in my real portfolio as well so the virtual account positions are similar to my real account however the quantity of shares held are different. I have chosen not to post my real portfolio since I prefer to maintain confidentiality as to the market value of my real portfolio. I hope you can understand my rationale for this approach and you will therefore respect my decision in this regard.
    Regards,
    Jeff

    ReplyDelete
  3. Of, course. I appreciate contribution to the public good. Trying to learn.
    Could someone trade covered calls full-time? Would you recommend it?

    ReplyDelete