Monday, October 26, 2009

Establish Quidel Corporation Covered Calls

A new covered calls position was established today in the Covered Calls Advisor Portfolio(CCAP) with the purchase of Quidel Corporation (QDEL) covered calls as follows:

Established Quidel Corporation (QDEL) Covered Calls for Nov09:
10/26/09 Bought 300 QDEL @ $15.10
10/26/09 Sold 3 QDEL Nov09 $15.00 Calls @ $.90

Quidel Corporation, together with its subsidiaries, engages in the development, manufacture, and marketing of point-of-care (POC) diagnostic solutions for infectious diseases, and reproductive and women's health. It provides POC and other diagnostic tests under the QuickVue, QuickVue+, QuickVue Advance, Metra, Quidel, and MicroVue brand names. The company offers products for infectious diseases, such as Influenza, Group A Strep, and Respiratory Syncitial Virus; and for reproductive and women's health, including pregnancy, Chlamydia, Bacterial Vaginosis, and Bone Health. It also offers Immunoassay fecal occult blood test used to detect the presence of blood in stool specimens; and Helicobacter pylori test, a serological test to measure antibodies circulating in the blood caused by the immune response to the H. pylori bacterium. It sells its products to professionals for use in physician offices, hospitals, clinical laboratories, retail clinics, and wellness screening centers through a network of national and regional distributors, and a direct sales force in the United States, as well as through distributor arrangements primarily in Japan, Europe, and the Middle East. The company has recently announced an agreement with BioHelix Corporation for the development and commercialization of in vitro molecular diagnostic tests utilizing isothermal amplification technology. Quidel Corporation was founded in 1979 and is based in San Diego, California.

The 'Buy Alerts' spreadsheet below shows that QDEL has a 'Total Points' rating of 22.46 which exceeds the Covered Calls Advisor's desired threshold of 20.0 points. As such, QDEL became a viable candidate as a potential covered calls investment.

Note: For expanded view, left click on the spreadsheet above.

Some possible overall performance results(including commissions) for this QDEL investment would be as follows:
Stock Purchase Cost: $4,538.95
= ($15.10*300+$8.95 commission)

Net Profit:
(a) Options Income: +$258.80
= (300*$.90 - $11.20 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock exercised at $15.00): -$38.95
= ($15.00-$15.10)*300 - $8.95 commissions

Total Net Profit(If stock exercised at $15.00): +$219.85
= (+$258.80 +$0.00 -$38.95)

Absolute Return if Stock Exercised at $15.00: +4.8%
= +$219.85/$4,538.95
Annualized Return If Exercised (ARIE): +68.0%
= (+$219.85/$4,538.95)*(365/26 days)

Downside Breakeven Price Point: $14.20
= $15.10 - $.90
Downside Breakeven Protection: 4.8%
This in-the-money position provides up to 0.7% [($15.10-$15.00)/$15.10] downside protection available while still achieving the maximum potential annualized return-on-investment of +68.0% from this covered calls position.