Monday, April 13, 2009

Roll-Up-and-Forward -- General Electric

The Covered Calls Advisor Portfolio (CCAP) covered calls position in General Electric(GE) was rolled-up-and-forward today (04/13/09) from the Apr09 $10.00s to the May09 $12.00s. The debit-spread transaction was executed as follows:

04/13/09 Buy-to-Close (BTC) 10 GE Apr09 $10.00s @ $2.34
04/13/09 Sell-to-Open (STO) 10 GE May09 $12.00s @ $1.24
Net Debit-Spread upon Roll-Up-and-Forward was $1.10 ($2.34 - $1.24)

The transactions history to date is as follows:
02/23/09 Initial Stock Purchase Transaction -- Bought 1000 GE @ $8.96
02/23/09 Inital Calls Sold Transaction -- Sold 10 GE Mar09 $10.00 Calls @ $.63
03/21/09 Mar09 Options Expired
03/23/09 Continuation Transaction -- Sell-to-Open (STO) 10 GE Apr $10s @ $.99
Note: The price of GE was $10.09 today when the call options were sold.
Roll-Up-and-Forward debit-spread transaction:
04/13/09 Buy-to-Close (BTC) 10 GE Apr09 $10.00s @ $2.34
04/13/09 Sell-to-Open (STO) 10 GE May09 $12.00s @ $1.24
Net Debit-Spread upon Roll-Up-and-Forward was $1.10 ($2.34 - $1.24)
Note: The price of GE was $12.20 today when the transaction was completed.

The overall performance results(including commissions) for the GE transactions through the May09 expiration would be as follows:
Stock Purchase Cost: $8,968.95
($8.96*1000+$8.95 commission)

Net Profit:
(a) Options Income: +$470.65 (1000*($.63+$.99-$2.34+$1.24) - 3*$16.45 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock exercised at $12.00): +$3,031.05
= ($12.00-$8.96)*1000 - $8.95 commissions

Total Net Profit(If stock price exercised at $12.00): +$3,501.70
= (+$470.65 +$0.00 +$3,031.05)

Absolute Return If Stock Price Exercised at $12.00 = +39.0%
+$3,501.70/$8,968.95
Annualized Return If Exercised (ARIE) +173.8%
(+$3,501.70/$8,968.95)*(365/82 days)

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