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Saturday, May 16, 2009

May 2009 Expiration Transactions

The Covered Calls Advisor Portfolio (CCAP) contained a total of twelve positions with May 2009 expirations, with the following results:
- Eight positions (ADM,ESRX,GE,HPQ,FXI,IWM,NE, and UNH) closed in-the-money. The calls were exercised and the stock was called away. It is especially rewarding to the Covered Calls Advisor that the closing prices of seven of the eight positions were such that the covered calls positions achieved a greater return-on-investment than would have been achieved from comparable buy-and-hold positions. The sole exception was UNH, where simply owning the stock would have yielded a higher ROI than was achieved with the covered calls position. The annualized percent return-on-investment(ROI) results for the eight exercised positions were:

Archer Daniels Midland Co (ADM): +76.5%
Express Scripts, Inc( ESRX): +87.6%
General Electric Company (GE): +173.8%
Hewlett-Packard Company (HPQ): +40.8%
iShares MSCI China ETF (FXI): +118.4%
iShares MSCI Russell 2000 Small Cap Index ETF (IWM): +78.6%
Noble Corp (NE): +116.6%
UnitedHealth Group Inc (UNH): +133.6%

- Four positions in the CCAP (AMGN,CHL,ENDP,and SOHU) ended out-of-the-money. Decisions will be made to either sell the equities, or to keep them and sell calls to establish Jun09 covered call positions. The related transactions will be made during the next few days and the actual transactions will be posted on this blog site on the same day they occur.

Detailed results for the eight positions that were assigned (called away) upon May09 expiration are as follows:

1. Archer Daniels Midland Co(ADM) -- Closed
The transactions history to date for the ADM covered calls is as follows:
04/20/09 Initial Stock Purchase Transaction -- Bought 400 ADM @ $25.27
04/20/09 Inital Calls Sold Transaction -- Sold 4 ADM May09 $25.00 Calls @ $1.70
05/16/09 May09 Options Exercised (400 shares of ADM called away)
Note: Closing price of ADM was $25.17 on expiration Friday.

The overall performance results(including commissions) for the ADM transactions through the May09 expiration are as follows:

Stock Purchase Cost: $10,116.95
($25.27*400+$8.95 commission)

Net Profit:
(a) Options Income: +$668.05 (400*$1.70 - $11.95 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation: -$116.95
= ($25.00-$25.27)*400 - $8.95 commissions

Total Net Profit: +$511.10
= (+$668.05 +$0.00 -$116.95)

Absolute Return: +5.4%
= +$511.10/$10,116.95
Annualized Return: +76.5%
= (+$511.10/$10,116.95)*(365/26 days)

2. Express Scripts Inc.(ESRX) -- Closed
The transactions history to date for the ESRX covered calls is as follows:
03/23/09 Initial Stock Purchase Transaction -- Bought 200 ESRX @ $47.05
03/23/09 Inital Calls Sold Transaction -- Sold 2 ESRX Apr09 $50.00 Calls @ $1.40
Roll-Up-and-Forward debit-spread transaction:
04/14/09 Buy-to-Close (BTC) 2 ESRX Apr09 $50.00s @ $9.60
04/14/09 Sell-to-Open (STO) 2 ESRX May09 $55.00s @ $6.50
05/16/09 May09 Options Exercised (200 shares of ESRX called away)
Note: Closing price of ESRX was $58.67 on expiration Friday.

The overall performance results(including commissions) for the ESRX transactions through the May09 expiration are as follows:
Stock Purchase Cost: $9,418.95
($47.05*200+$8.95 commission)

Net Profit:
(a) Options Income: -$360.90 (200*($1.40-$9.60+$6.50) - 2*$10.45 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation(Stock called away at $55.00): +$1,581.05
= ($55.00-$47.05)*200 - $8.95 commissions

Total Net Profit: +$1,220.15
= (-$360.90 +$0.00 +$1,581.05)

Absolute Return: +13.0%
= +$1,220.15/$9,418.95
Annualized Return: +87.6%
= (+$1,220.15/$9,418.95)*(365/54 days)

3. General Electric Company(GE) -- Closed
The transactions history to date for the GE covered calls 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.
05/16/09 May09 Options Exercised (1000 shares of GE called away)
Note: Closing price of GE was $12.86 on expiration Friday.

The overall performance results(including commissions) for the GE transactions through the May09 expiration are 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 (Stock exercised at $12.00): +$3,031.05
= ($12.00-$8.96)*1000 - $8.95 commissions

Total Net Profit: +$3,501.70
= (+$470.65 +$0.00 +$3,031.05)

Absolute Return: +39.0%
= +$3,501.70/$8,968.95
Annualized Return: +173.8%
= (+$3,501.70/$8,968.95)*(365/82 days)

4. Hewlett-Packard Company(HPQ) -- Closed
The transactions history to date for the HPQ covered calls is as follows:
01/20/09 Initial Stock Purchase Transaction -- Bought 300 HPQ @ $33.89
01/20/09 Inital Calls Sold Transaction -- Sold 3 HPQ Feb09 $37.50 Calls @ $.80
02/21/09 Feb09 Options Expired
02/25/09 Bought 300 HPQ @ $29.79
02/25/09 Sell-to-Open (STO) 6 HPQ Mar09 $32.50s @ $.55
03/09/09 $48.00 Ex-dividend ($.08 * 600 shares)
03/21/09 Mar09 Options Expired
03/23/09 Continuation Transaction -- Sell-to-Open (STO) 6 HPQ Apr $32.50s @ $.55
Note: The price of HPQ was $30.24 today when the call options were sold.
Roll-Up-and-Forward debit-spread transaction:
04/17/09 Buy-to-Close (BTC) 6 HPQ Apr09 $32.50s @ $3.10
04/17/09 Sell-to-Open (STO) 6 HPQ May09 $35.00s @ $1.95
05/16/09 May09 Options Exercised (600 shares of HPQ called away)
Note: Closing price of HPQ was $35.01 on expiration Friday.

The overall performance results(including commissions) for the HPQ transactions are as follows:
Stock Purchase Cost: $19,121.90
($33.89*300+$29.79*300+2*$8.95 commission)

Net Profit:
(a) Options Income: +$158.45 = (300*$.80 + 600*($.55+$.55-$3.10+$1.95) - $51.55 commissions)
(b) Dividend Income: +$48.00
(c) Capital Appreciation (Stock exercised at $35.00): +$1,887.05
= [$35.00-$31.84(avg cost basis)]*600 - $8.95 commissions

Total Net Profit(Stock price exercised at $35.00): +$2,093.50
= (+$158.45 +$48.00 +$1,887.05)

Absolute Return: +10.9%
= +$2,093.50/$19,121.90
Annualized Return: +40.8%
= (+$1,296.95/$19,121.90)*(365/(116+80)/2 days)

5. iShares MSCI China ETF(FXI) -- Closed
The transactions history to date for the FXI covered calls is as follows:
04/21/09 Initial Stock Purchase Transaction -- Bought 1200 FXI @ $31.52
04/21/09 Inital Calls Sold Transaction -- Sold 12 FXI May09 $33.00 Calls @ $1.10
05/16/09 May09 Options Exercised (1200 shares of FXI called away)
Note: Closing price of FXI was $33.68 on expiration Friday.

The overall performance results(including commissions) for the FXI transactions are as follows:
Stock Purchase Cost: $37,832.95
($31.52*1200+$8.95 commission)

Net Profit:
(a) Options Income: +$1,302.05 = (1200*$1.10 - $17.95 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (Stock exercised at $33.00): +$1,767.05
= ($33.00-$31.52)*1200 - $8.95 commissions

Total Net Profit(Stock exercised at $33.00): +$3,069.10
= (+$1,302.05 +$0.00 +$1,767.05)

Absolute Return: +8.1%
= +$3,069.10/$37,832.95
Annualized Return: +118.4%
= (+$3,069.10/$37,832.95)*(365/25 days)

6. iShares MSCI Russell 2000 Small Cap ETF(IWM) -- Closed
The transactions history to date for the IWM covered calls is as follows:
04/23/09 Initial Stock Purchase Transaction -- Bought 400 IWM @ $46.62
04/23/09 Inital Calls Sold Transaction -- Sold 4 IWM May09 $47.00 Calls @ $1.98
05/16/09 May09 Options Exercised (400 shares of IWM called away)
Note: Closing price of IWM was $47.76 on expiration Friday.

The overall performance results(including commissions) for the IWM transactions are as follows:
Stock Purchase Cost: $18,656.95
= ($46.62*400+$8.95 commission)

Net Profit:
(a) Options Income: +$780.05 = (400*$1.98 - $11.95 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (Stock exercised at $47.00): +$144.05
= ($47.00-$46.62)*400 - $8.95 commissions

Total Net Profit(Stock exercised at $47.00): +$924.10
= (+$780.05 +$0.00 +$144.05)

Absolute Return: +5.0%
= +$924.10/$18,656.95
Annualized Return: +78.6%
= (+$924.10/$18,656.95)*(365/23 days)

7. Noble Corp (NE) -- Closed
The transactions history to date for the NE covered calls is as follows:
04/21/09 Bought 500 NE @ $26.37
04/21/09 Sold 5 NE May09 $27.50 Calls @ $1.02
05/16/09 May09 Options Exercised (500 shares of NE called away)
Note: Closing price of NE was $27.92 on expiration Friday.

The overall performance results(including commissions) for the NE transactions are as follows:
Stock Purchase Cost: $13,193.95
= ($26.37*500+$8.95 commission)

Net Profit:
(a) Options Income: +$497.30
= (500*$1.02 - $12.70 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (Stock exercised at $27.50): +$556.05
= ($27.50-$26.37)*500 - $8.95 commissions

Total Net Profit(Stock exercised at $27.50): +$1,053.35
= (+$497.30 +$0.00 +$556.05

Absolute Return: +8.0%
= +$1,053.35/$13,193.95
Annualized Return: +116.6%
= (+$1,053.35/$13,193.95)*(365/25 days)

8. UnitedHealth Group Inc (UNH) -- Closed
The transactions history to date for the UNH covered calls is as follows:
03/10/09 Bought 300 UNH @ $18.96
03/10/09 Sold 3 UNH Mar09 $19.00 Calls @ $1.20
Roll-Up-and-Forward debit-spread transaction:
03/19/09 Buy-to-Close (BTC) 3 UNH Mar09 $19.00s @ $3.05
03/19/09 Sell-to-Open (STO) 3 UNH Apr09 $45s @ $1.75
03/31/09 $9.00 Ex-Dividend ($.03*300 shares)
Roll-Up-and-Forward debit-spread transaction:
04/15/09 Buy-to-Close (BTC) 3 UNH Apr09 $22.00s @ $3.11
04/15/09 Sell-to-Open (STO) 3 UNH May09 $25.00s @ $1.94
05/16/09 May09 Options Exercised (300 shares of UNH called away)
Note: Closing price of UNH was $27.51 on expiration Friday.

The overall performance results(including commissions) for the UNH transactions are as follows:
Stock Purchase Cost: $5,696.95
($18.96*300+$8.95 commission)

Net Profit:
(a) Options Income: -$414.60
= (300*($1.20-$3.05+$1.75-$3.11+$1.94) - 3*$11.20 commissions)
(b) Dividend Income: +$9.00
(c) Capital Appreciation (Stock exercised at $25.00): +$1,803.05
= ($25.00-$18.96)*300 - $8.95 commissions

Total Net Profit(Stock exercised at $25.00): +$1,397.45
= (-$414.60 +$9.00 +$1,803.05)

Absolute Return: +24.5%
= +$1,397.45/$5,696.95
Annualized Return: +133.6%
= (+$1,397.45/$5,696.95)*(365/67 days)

3 comments:

  1. Congrats on your incredible success! I am pretty new to the equity options game, but I think I would like to buy some calls on GE, ICE, and IPE. However, I cannot find where to get a list of the call premiums for these companies. All I can seem to find on bloomberg, marketwatch, etc. is some basic trading day data. Where do you go to get your call and put options premia. Thanks in advance and I wish you continued success!

    -Joe Hill

    ReplyDelete
  2. Joe,
    I get real-time options pricing via my broker's online services (Schwab.com and Schwab StreetSmartPro). Your broker should provide you something similar.
    Note: You mentioned 'buy' calls. I do not recommend 'buying' options -- only 'selling' them.
    Jeff

    ReplyDelete
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