Wednesday, February 25, 2009

j2 Global Communications Inc -- Continuation Transaction

The following transaction was made to establish a covered calls position against the 300 shares owned in j2 Global Communications Inc (JCOM):
02/25/09 Sell-to-Open (STO) 3 JCOM Mar09 $20s @ $.75

The transactions history to date is as follows:
01/23/09 Initial Stock Purchase Transaction -- Bought 300 JCOM @ $16.76
01/23/09 Inital Calls Sold Transaction -- Sold 3 JCOM Feb09 $17.50 Calls @ $1.00
Roll-Up Spread Transaction:
02/03/09 Buy-to-Close (BTC) 3 JCOM Feb09 $17.5s @ $2.76
02/03/09 Sell-to-Open (STO) 3 JCOM Feb09 $20s @ $1.06
Note: The price of JCOM was $19.90 today when this transaction was executed.
02/21/09 Feb09 Options Expired
02/25/09 Sell-to-Open (STO) 3 JCOM Mar09 $20s @ $.75
Note: JCOM stock was priced at $19.37 today when the calls were sold.

The overall performance results(including commissions) for the JCOM transactions through the Mar09 expiration would be as follows:

Stock Purchase Cost: $5,036.95
($16.76*300+$8.95 commission)

Net Profit:
(a) Options Income: -$18.60 (300*($1.00-$2.76+$1.06+$.75) - 3*$11.20 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If unchanged): +$774.05 = ($19.37-$16.76)*300 - $8.95 commissions
(c) Capital Appreciation (If exercised): +$963.05 = ($20.00-$16.76)*300 - $8.95 commissions

Total Net Profit(If stock price unchanged at $19.37): +$755.45
= (-$18.60 +$0.00 +$774.05)
Total Net Profit(If stock price exercised at $20.00): +$944.45
= (-$18.60 +$0.00 +$963.05)

Absolute Return (If Stock Price Unchanged at $19.37) = +15.0%+$755.45/$5,036.95
Annualized Return If Unchanged (ARIU) +96.0%
(+$755.45/$5,036.95)*(365/57 days)

Absolute Return If Exercised = +18.8%
+$944.45/$5,036.95
Annualized Return If Exercised (ARIE) +120.1%
(+$944.45/$5,036.95)*(365/57 days)

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