Tuesday, June 30, 2009

Establish Bank of America Corp Covered Calls


A new covered calls position was established today in the Covered Calls Advisor Portfolio(CCAP) with the purchase of Bank of America Corp (BAC) covered calls as follows:

Established Bank of America Corp (BAC) Covered Calls for Jul09:
06/30/09 Bought 1000 BAC @ $13.25
06/30/09 Sold 10 BAC Jul09 $13.00 Calls @ $.82

Some potential results from this transaction are:
Absolute Return if Exercised at $13.00: +4.3%
= [($.82-($13.25-$13.00)]/$13.25
Annualized Return If Exercised (ARIE): +87.2%
= [($.82-($13.25-$13.00))/$13.25]*(365/18 days)

Downside Breakeven Price Point: $12.43
Downside Breakeven Protection: 6.2%

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