Thursday, January 22, 2009

Express Scripts Inc -- Continuation Transaction

The following transaction was made today to establish a covered calls position against the 200 shares owned in Express Scripts Inc.(ESRX):
01/22/09 Sell-to-Open (STO) 2 ESRX Feb09 $55s @ $2.10

The Transactions History to date is as follows:
12/22/08 Initial Stock Purchase Transaction -- Bought 200 ESRX @ $59.86
12/22/08 Inital Calls Sold Transaction -- Sold 2 ESRX Jan09 $60.00 Calls @ $2.90
01/17/09 Jan09 Options Expired
01/22/09 Continuation Transaction -- Sell-to-Open (STO) 2 ESRX Feb09 $55s @ $2.10
Note: The price of ESRX was $52.40 today when the Feb09 options were sold.


The overall performance results(including commissions) for the ESRX transactions are as follows:
Stock Purchase Cost: $11,980.95
($59.86*200+$8.95 commission)

Net Profit:
(a) Options Income: +$979.10 (200*($2.90+$2.10) - 2*$10.45 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock price unchanged at $52.40): -$1,483.05
= ($52.40-$59.86)*200 - $8.95 commissions
(c) Capital Appreciation (If exercised): -$980.95
= ($55.00-$59.86)*1000 - $8.95 commissions

Total Net Profit(If stock price unchanged at $32.87): -$503.95
= (+$979.10 +$0.00 -$1,483.05)

Total Net Profit(If stock price exercised at $55.00): -$1.85
= (+$979.10 +$0.00 -$980.95)

Annualized Return If Stock Price Unchanged (ARIU) -25.2%
(-$503.95/$11,980.95)*(365/61 days)

Annualized Return If Exercised (ARIE) -0.1%
(-$1.85/$11,980.95)*(365/61 days)

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