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Tuesday, December 23, 2008

Microsoft Corp (MSFT) Continuation Transaction

The following transaction was made today to establish a covered calls position against the 500 shares owned in Microsoft Corp(MSFT):
12/23/08 Covered Calls Continuation Transaction -- STO 5 Jan09 $21.00 Calls @ $.36

The Transactions History to date is as follows:
08/18/08 Bought 500 MSFT @ $27.95
08/18/08 Sold 5 MSFT Sep08 $28.00 Calls @ $.81
09/11/08 $55.00 Dividend Received ($.11*500 shares)
09/20/08 Sep08 Options Expired
09/26/08 Covered Calls Continuation Transaction -- STO 5 Oct08 $28.00 Calls @ $.55
10/18/08 Oct08 Options Expired
10/20/08 Sold 5 MSFT Nov08 $22.50 Calls @ $1.75
11/22/08 Nov08 Options Expired
11/24/08 Sold 5 MSFT Dec08 $20 Calls @$.80
12/11/08 $65.00 Dividend Received ($.13*500 shares)
12/20/08 Dec08 Options Expired
12/23/08 Covered Calls Continuation Transaction -- STO 5 Jan09 $21.00 Calls @ $.36

The overall performance results(including commissions) for the MSFT transactions are as follows:
Stock Purchase Cost: $13,983.95
($27.95*500+$8.95 commission)

Net Profit:
(a) Options Income: +$1,751.50 (500*($.81+$.55+$1.75+$.80+$.36) - 5*$12.70 commissions)
(b) Dividend Income: +$130.00 ($55.00+$65.00)
(c) Capital Appreciation (If exercised): -$3,492.90
= ($21.00-$27.95)*500 - 2*$8.95 commissions

Annualized Return If Exercised (ARIE) -30.9%

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