Thursday, January 22, 2009

Potash Corp -- Continuation Transaction

The following transaction was made today to establish a covered calls position against the 200 shares owned in Potash Corp of Saskatchewan Inc(POT):
01/22/09 Sell-to-Open (STO) 2 POT Feb09 $70s @ $7.20

The Transactions History to date is as follows:
12/22/08 Initial Stock Purchase Transaction -- Bought 200 POT @ $65.84
12/22/08 Inital Calls Sold Transaction -- Sold 2 POT Jan09 $65.00 Calls @ $5.90
01/02/09 Buy-to-Close (BTC) 2 POT Jan09 $65s @ $11.35
01/02/09 Sell-to-Open (STO) 2 POT Jan09 $75s @ $4.35
01/17/09 Jan09 Options Expired
01/22/09 Continuation Transaction -- Sell-to-Open (STO) 2 POT Feb09 $70s @ $7.20
Note: The price of POT was $72.36 today when the calls were sold.


The overall performance results(including commissions) for the POT transactions are as follows:
Stock Purchase Cost: $13,176.95
($65.84*200+$8.95 commission)

Net Profit:
(a) Options Income: +$1,188.65
(200*($5.90-$11.35+$4.35+$7.20) - 3*$10.45 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If exercised): +$823.05
= ($70.00-$65.84)*200 - $8.95 commissions

Total Net Profit(If stock price exercised at $70.00): +$2,011.70
= (+$1,188.65 +$0.00 +$823.05)

Annualized Return If Exercised (ARIE) +91.4%
(+$2,011.70/$13,176.95)*(365/61 days)

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