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Thursday, December 3, 2009

Continuation Transaction -- Multi-Fineline Electronix Inc.(MFLX)

The Covered Calls Advisor Portfolio(CCAP) position in Multi-Fineline Electronix Inc.(MFLX) was out-of-the-money at Nov09 expiration. Today it was decided to retain the 400 shares of Multi-Fineline Electronix Inc.(MFLX) and to establish a Feb2010 covered calls position as follows:

12/03/09 Sell-to-Open (STO) 4 MFLX Feb2010 $30.00s @ $.95

The transactions history to date and the profit potential for the continuation covered calls position in MFLX is as follows:
10/22/09 Bought 400 MFLX @ $27.50
10/22/09 Sold 4 MFLX Nov09 $30.00 Calls @ $.80
11/21/09 Nov09 Options Expired
12/03/09 Sell-to-Open (STO) 4 MFLX Feb2010 $30.00s @ $.95
Note: The price of MFLX was $26.29 today when this transaction was made.

Some possible overall performance results(including commissions) for this MFLX covered calls position would be as follows:
Stock Purchase Cost: $11,008.95
= ($27.50*400+$8.95 commission)

Net Profit:
(a) Options Income: +$676.10
= (400*($.80+$.95) - 2*$11.95 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation(If stock price unchanged from current $26.29): -$492.95
= ($26.29-$27.50)*400 - $8.95 commissions
(c) Capital Appreciation (If stock exercised at $30.00): +$991.05
= ($30.00-$27.50)*400 - $8.95 commissions

Total Net Profit(If stock price unchanged at $26.29): +$183.15
= (+$676.10 +$0.00 -$492.95)
Total Net Profit(If stock exercised at $30.00): +$1,667.15
= (+$676.10 +$0.00 +$991.05)

Absolute Return if Stock Price Unchanged at $26.29: +1.7%
= +$183.15/$11,008.95
Annualized Return If Unchanged (ARIU): +5.0%
= (+$183.15/$11,008.95)*(365/121 days)

Absolute Return if Stock Exercised at $30.00: +15.1%
= +$1,667.15/$11,008.95
Annualized Return If Exercised (ARIE): +45.7%
= (+$1,299.10/$11,008.95)*(365/121 days)

1 comment:

  1. Interesting and informative blog, Jeff! Contracts in US stocks are for 100 shares? Whereas London stocks usually trade contracts of 1000. I STO Calls/Puts in the FTSE Index itself, which are margined with cash and UK Gilts (Treasury Bonds) Risky but fun! I post my results on a monthly basis, should you be interested. I also post rants, but I guess no-one ever reads them, 'cos I never get comments.

    All good wishes for your trades.

    ReplyDelete