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Wednesday, March 3, 2010

Continuation Transactions -- Amgen Inc. and Fluor Corporation

Today, the Covered Calls Advisor Portfolio(CCAP) established Mar2010 covered calls positions for current stock holdings in Amgen Inc. and Fluor Corporation, both for which prior Feb2010 covered calls had expired out-of-the-money. Details of the covered calls positions established today for AMGN and FLR are as follows:

1. Amgen Inc.(AMGN) -- Continuation

Today it was decided to retain the 200 shares of Amgen Inc.(AMGN) and to establish a Mar2010 covered calls position as follows:

03/03/2010 Sell-to-Open (STO) 2 AMGN Mar2010 $57.50s @ $.69

The transactions history to date for AMGN is as follows:
10/22/09 Bought 200 AMGN @ $56.40
10/22/09 Sold 2 AMGN Nov09 $57.50 Calls @ $1.20
11/21/09 Nov09 Options Expired
11/23/09 Sell-to-Open (STO) 2 AMGN Dec09 $57.50s @ $.93
Note: Price of AMGN was $56.15 when the Dec09 options were sold.
12/19/09 Dec09 Options Expired
12/21/09 Sell-to-Open (STO) 2 AMGN Jan2010 $57.50s @ $1.14
Note: Price of AMGN was $56.80 when the Jan2010 options were sold.
01/16/2010 Jan2010 Options Expired
01/19/2010 Sell-to-Open (STO) 2 AMGN Feb2010 $57.50s @ $1.45
Note: Price of AMGN was $57.02 when the Feb2010 options were sold.
02/20/2010 Feb2010 Options Expired
03/03/2010 Sell-to-Open (STO) 2 AMGN Mar2010 $57.50s @ $.69
Note: Price of AMGN was $57.16 when the Mar2010 options were sold.

Two possible overall performance results(including commissions) for the AMGN transactions would be as follows:
Stock Purchase Cost: $11,288.95
= ($56.40*200+$8.95 commission)

Net Profit:
(a) Options Income: +$1,029.75
= (200*($1.20+$.93+$1.14+$1.45+$.69) - 5*$10.45 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation(If stock price unchanged at $57.16): +$143.05
= ($57.16-$56.40)*200 - $8.95 commissions
(c) Capital Appreciation (If stock exercised at $57.50): +$211.05
= ($57.50-$56.40)*200 - $8.95 commissions

Total Net Profit(If stock price unchanged at $57.16): +$1,172.80
= (+$1,029.75 +$0.00 +$143.05)
Total Net Profit(If stock exercised at $57.50): +$1,240.80
= (+$1,029.75 +$0.00 +$211.05)

Absolute Return if Stock Price Unchanged at $57.16: +10.4%
= +$1,172.80/$11,288.95
Annualized Return If Unchanged (ARIU): +25.4%
= (+$1,172.80/$11,288.95)*(365/149 days)

Absolute Return if Stock Exercised at $57.50: +11.0%
= (+$1,240.80/$11,288.95)
Annualized Return If Exercised (ARIE): +26.9%
= (+$1,240.80/$11,288.95)*(365/149 days)


2. Fluor Corporation (FLR) -- Continuation

Today it was decided to retain the 300 shares of Fluor Corporation (FLR) and to establish a Mar2010 covered calls position as follows:

03/03/2010 Sell-to-Open (STO) 3 FLR Mar2010 $45.00s @ $.35

The transactions history to date for FLR is as follows:
09/22/09 Bought 300 FLR @ $54.93
09/22/09 Sold 3 FLR Oct09 $55.00 Calls @ $1.95
10/17/09 Oct09 Options Expired
The closing price of FLR was $50.24 on expiration Friday.
10/19/09 Sell-to-Open (STO) 3 FLR Nov09 $55.00s @ $.95
The price of FLR was $51.57 today when this transaction was executed.
11/11/09 Buy-to-Close (BTC) 3 FLR Nov09 $55.00s @ $.05
11/11/09 Sell-to-Open (STO) 3 FLR Nov09 $45.00s @ $1.15
Note: Net Credit-Spread upon Roll-Down was $1.10 ($1.15 - $.05)
11/21/09 Nov09 Options Expired
The closing price of FLR was $44.19 on expiration Friday.
12/02/2009 Ex-Dividend $37.50 (.125*300 shares)
12/15/09 Sell-to-Open (STO) 3 FLR Jan2010 $45.00s @ $1.10
Note: The price of FLR was $43.10 today when this transaction was made.
01/16/2010 Jan2010 Options Expired
03/03/2010 Ex-Dividend $37.50 (.125*300 shares)
03/03/2010 Sell-to-Open (STO) 3 FLR Mar2010 $45.00s @ $.35
Note: Price of FLR was $43.26 when the Mar2010 options were sold.

Two possible overall performance results(including commissions) for the FLR transactions would be as follows:
Stock Purchase Cost: $16,487.95
= ($54.93*300+$8.95 commission)

Net Profit:
(a) Options Income: +$1,579.00
= (300*($1.95+$.95-$.05+$1.15+$1.10+$.35) - 5*$11.20 commissions)
(b) Dividend Income: +$75.00 =($.125*2)*300 shares
(c) Capital Appreciation (If stock price unchanged at $43.26): -$3,509.95
= ($43.26-$54.93)*300 - $8.95 commissions
(c) Capital Appreciation (If exercised at $45.00): -$2,987.95
= ($45.00-$54.93)*300 - $8.95 commissions


Total Net Profit(If stock price unchanged at $43.26): -$1,855.95
= (+$1,579.00 +$75.00 -$3,509.95)
Total Net Profit(If stock price exercised at $45.00): -$1,333.95
= (+$1,579.00 +$75.00 -$2,987.95)

Absolute Return if Stock Price Unchanged at $43.26: -11.3%
= -$1,855.95/$16,487.95
Annualized Return If Stock Price Unchanged (ARIU): -23.0%
= (-$1,855.95/$16,487.95)*(365/179 days)

Absolute Return if Exercised at $45.00: -8.1%
= -$1,333.95/$16,487.95
Annualized Return If Exercised (ARIE) -16.5%
= (-$1,333.95/$16,487.95)*(365/179 days)