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Thursday, January 22, 2009

iShares MSCI South Korea Index ETF -- Continuation Transaction

The following transaction was made today to establish a covered calls position against the 600 shares owned in iShares MSCI South Korea Index ETF (EWY):
01/22/09 Sell-to-Open (STO) 6 EWY Feb09 $28s @ $1.00

The Transactions History to date is as follows:
12/22/08 Initial Stock Purchase Transaction -- Bought 600 EWY @ $28.50
12/22/08 Inital Calls Sold Transaction -- Sold 6 EWY Jan09 $30.00 Calls @ $1.10
01/17/09 Jan09 Options Expired
01/22/09 Continuation Transaction -- Sell-to-Open (STO) 6 EWY Feb09 $28s @ $1.00
Note: The price of EWY was $25.45 today when the Feb09 options were sold.


The overall performance results(including commissions) for the EWY transactions are as follows:
Stock Purchase Cost: $17,108.95
($28.50*600+$8.95 commission)

Net Profit:
(a) Options Income: +$1,233.10 (600*($1.10+$1.00) - 2*$13.45 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock price unchanged at $25.45): -$1,838.95
= ($25.45-$28.50)*600 - $8.95 commissions
(c) Capital Appreciation (If exercised): -$308.95
= ($28.00-$28.50)*600 - $8.95 commissions

Total Net Profit(If stock price unchanged at $25.45): -$605.85
= (+$1,233.10 +$0.00 -$1,838.95)

Total Net Profit(If stock price exercised at $28.00): +924.15
= (+$1,233.10 +$0.00 -$308.95)

Annualized Return If Stock Price Unchanged (ARIU) -21.2%
(-$605.85/$17,108.95)*(365/61 days)

Annualized Return If Exercised (ARIE) +32.3%
(+$924.15/$17,108.95)*(365/61 days)

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