Wednesday, January 28, 2009

Microsoft Corp -- Continuation Transaction

The following transaction was made today to establish a covered calls position against the 500 shares owned in Microsoft Corp (MSFT):
01/28/09 Sell-to-Open (STO) 5 MSFT Feb09 $18s @ $.70

The Transactions History to date is as follows:
08/18/08 Initial Stock Purchase Transaction -- Bought 500 MSFT @ $27.95
08/18/08 Inital Calls Sold Transaction -- 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
01/17/09 Jan09 Options Expired
01/28/09 Continuation Transaction -- Sell-to-Open (STO) 5 MSFT Feb09 $18s @ $.70
Note: The price of MSFT was $18.10 today when the calls were sold.
02/17/09 $65.00 Ex-Dividend ($.13*500 shares)

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: +$2,503.80 (500*($.81+$.55+$1.75+$.80+$.36+$.70) - 6*$12.70 commissions)
(b) Dividend Income: +$185.00 ($55.00+$65.00+$65.00)
(c) Capital Appreciation (If exercised): -$4,983.95
= ($18.00-$27.95)*500 - $8.95 commissions

Total Net Profit(If stock price exercised at $18.00): -$2,295.15
= (+$2,503.80 +$185.00 -$4,983.95)

Annualized Return If Exercised (ARIE) -32.0%
(-$2,295.15/$13,983.95)*(365/187 days)

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