Thursday, April 16, 2009

Gymboree Corp -- Closed

The covered calls position in Gymboree Corp(GYMB) was closed today by buying back the Apr09 $20 call and then selling the 300 shares owned. GYMB stock experienced a very bullish move when the company recently provided a revised 1st quarter earnings forecast that was substantially higher than their prior estimate. The Covered Calls Advisor decided to take profits by closing out the covered calls position since it was determined that the stock had increased to fair value. Proceeds from the transactions will be allocated to a new covered calls position for May09 expiration within the next few days.

The transactions history for GYMB was as follows:
03/23/09 Initial Stock Position -- Bought 300 GYMB @ $18.07
03/23/09 Initial Call Options -- Sold 3 GYMB Apr09 $20.00 Calls @ $.50
04/16/09 Bought to Close 3 Apr09 $20.00 calls at $9.10
Note: Price of GYMB was $29.04 when this transaction was executed.
04/16/09 Sold 300 GYMB at $29.15

The overall performance results (including commissions) for the GYMB transactions were as follows:
Stock Purchase Cost: $5,429.95
($18.07*300+$8.95 commission)

Net Profit:
(a) Options Income: -$2,602.40 [300*($.50 - $9.10)-$2*$11.20 commissions)
(b) Dividend Income: $0
(c) Capital Appreciation: +$3,315.05
= 300*($29.15-$18.07)-$8.95 commissions

Total Net Profit: +$712.65
= -$2,602.40+$0+$3,315.05

Absolute Return: +13.1%
= +$712.65/$5,429.95
Annualized Return: +199.6%
=(+$712.65/$5,429.95)*(365/24 days)