Monday, November 24, 2008

Dell, General Electric, Honeywell, and St Jude Medical -- Closed

Four Nov08 covered calls positions that expired with the stock prices out-of-the-money were closed out today by selling the stock. It was decided to sell these four stocks rather than rolling-out to Dec08 covered calls to raise cash in order to invest in covered call opportunites that this advisor believes are more attractive at this time. The detailed results for the completed positions in Dell, GE, Honeywell, and St Jude Medical are as follows:

1. Dell Inc (DELL) -- Closed

The position in Dell (DELL) was closed today by selling the 1200 shares owned.

The Transactions History to date is as follows:
09/25/08 Initial Stock Purchase Transaction -- Bought 1200 DELL @ $16.73
09/25/08 Initial Calls Sold Transaction -- Sold 12 DELL Oct08 $17.00 Calls @ $.75
10/18/08 Oct08 Options Expired
10/28/08 Sold 1200 DELL Nov08 $13.00 Calls at $.78
11/22/08 Nov08 Options Expired
11/24/08 Sold 1200 DELL @$9.55

The overall performance results(including commissions) for the DELL transactions are as follows:
Stock Purchase Cost: $20,084.95
($16.73*1200-$8.95 commission)

Net Profit:
(a) Options Income: +$1,800.10 (1200*($.75+$.78) - $35.90 commissions)
(b) Dividend Income: $0
(c) Capital Appreciation: -$8,633.90
= -($16.73-$9.55)*1200 - 2*$8.95 commissions

Total Net Profit: -$6,833.80
= (+$1,800.10 + $0 - $8,633.90)

Annualized Return: -207.0%
(-$6,833.80/$20,084.95)*(365/60 days)


2. General Electric (GE) -- Closed

The position in General Electric (GE) was closed today by selling the 200 shares owned.

The Transactions History to date is as follows:
10/02/08 Initial Stock Purchase Transaction -- Bought 200 GE @ $22.25
10/02/08 Initial Calls Sold Transaction -- Sold 2 GE Oct08 $22.00 Calls @ $1.53
10/18/08 Oct08 Options Expired
10/20/08 Covered Calls Continuation Transaction -- STO 2 Nov08 $21.00 Calls @ $.88
11/22/08 Nov08 Options Expired
11/24/08 Sold 200 GE @$15.01

The overall performance results(including commissions) for the GE transactions are as follows:
Stock Purchase Cost: $4,458.95
($22.25*200+$8.95 commission)

Net Profit:
(a) Options Income: +$461.10 (200*($1.53+$.88) - 2*$10.45 commissions)
(b) Dividend Income: $0
(c) Capital Appreciation: -$1,465.90
= ($15.01-$22.25)*200 - 2*$8.95 commissions

Total Net Profit: -$1,004.80
= (+$461.10 + $0 - $1,465.90)

Annualized Return: -155.2%
(-$1,004.80/$4,458.95)*(365/53 days)


3. Honeywell Inc (HON) -- Closed

The position in Honeywell (HON) was closed today by selling the 500 shares owned.

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.
08/14/08 $137.50 (Ex-Div of $.275*500 shares)
08/16/08 Aug08 Options Expired
08/18/08 Covered Calls Continuation Transaction -- STO 5 Sep08 $52.50 Calls @ $1.00
Note: Price of HON was $50.86 when the calls were sold today.
09/20/08 Sep08 Options Expired
09/23/08 Covered Calls Continuation Transaction -- STO 2 Oct08 $40.00 Calls @ $5.45
10/18/08 Oct08 Options Expired
10/20/08 Covered Calls Continuation Transaction -- STO 2 Nov08 $32.50 Calls @ $.95
11/18/08 $137.50 (Ex-Div of $.275*500 shares)
11/22/08 Nov08 Options Expired
11/24/08 Sold 500 HON @$25.90

The overall performance results(including commissions) for the HON transactions are as follows:
Stock Purchase Cost: $29,453.95
($58.89*500-$8.95 commission)

Net Profit:
(a) Options Income: +$5,351.50 (500*($1.20+$.85+$1.38+$1.00+$5.45+$.95) - 5*$12.70)$35.90 commissions)
(b) Dividend Income: $275.00 ($137.50 * 2 Ex-Divs)
(c) Capital Appreciation: -$16,512.90
= ($25.90-$58.89)*500 - 2*$8.95 commissions

Total Net Profit: -$10,886.40
= (+$5,351.50 + $275.00 - $16,512.90)

Annualized Return: -72.9%
(-$10,886.40/$29,453.95)*(365/185 days)


4. St Jude Medical Inc (STJ) -- Closed

The position in St Jude Medical (STJ) was closed today by selling the 400 shares owned.

The Transactions History to date is as follows:
08/18/08 Initial Stock Purchase Transaction -- Bought 400 STJ @ $46.36
08/18/08 Initial Calls Sold Transaction -- Sold 4 STJ Sep08 $45.00 Calls @ $2.40
09/20/08 Sep08 Options Expired
09/25/08 Covered Calls Continuation Transaction -- Sold 4 STJ Oct08 $45.00 Calls @ $1.60
10/18/08 Oct08 Options Expired
10/20/08 Covered Calls Continuation Transaction -- STO 4 Nov08 $40.00 Calls @ $1.15
11/22/08 Nov08 Options Expired
11/24/08 Sold 500 STJ @$27.93

The overall performance results(including commissions) for the STJ transactions are as follows:
Stock Purchase Cost: $18,552.95
($46.36*400+$8.95 commission)

Net Profit:
(a) Options Income: +$2,024.15 (400*($2.40+$1.60+$1.15) - 3*$11.95 commissions)
(b) Dividend Income: $0
(c) Capital Appreciation: -$7,389.90
= ($27.93-$46.36)*400 - 2*$8.95 commissions

Total Net Profit: -$5,365.75
= (+$2,024.15 + $0 - $7,389.90)

Annualized Return: -107.7%
(-$5,365.75/$18,552.95)*(365/98 days)

1 comment:

  1. I don't think you are doing your annual return calculations correctly. For example, on DELL, you have:

    Annualized Return: -207.0%
    (-$6,833.80/$20,084.95)*(365/60 days)

    It isn't possible to lose more than 100% on a covered call position. Especially since you still have $13,000+ remaining in your pocket from the original investment. If you did NOTHING with the money the rest of the year, you'd only be down about 34%.

    IMO, the calculation should be:

    ((20084.95-6833.8)/20084.95)^(365/60)-1

    ...which comes out to -92%. That would be the result at the end of the year if you invested your returned money in a similar investment for the rest of the remaining 305 days of the year.

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