Thursday, March 18, 2010

Roll Out -- Fluor Corp.

The Covered Calls Advisor remains bullish on Fluor Corporation (FLR), so the decision was made to retain Fluor and to roll-out from the Mar2010 to the Apr2010 expiration at the $45.00 strike price. With a time value remaining in the Mar2010 $45.00 covered calls at only $.09 [$1.35-($46.26-$45.00)], a roll-out credit spread transaction was executed as follows:
03/17/2010 Buy-to-Close (BTC) 3 FLR Mar2010 $45.00s @ $1.35
03/17/2010 Sell-to-Open (STO) 3 FLR Apr2010 $45.00s @ $2.15
Note: Net Credit Spread upon Roll-Out was $.80 ($2.15 - $1.35)

The transactions history to date for Fluor Corp. (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.
03/17/2010 Buy-to-Close (BTC) 3 FLR Mar2010 $45.00s @ $1.35
03/17/2010 Sell-to-Open (STO) 3 FLR Apr2010 $45.00s @ $2.15
Note: Price of FLR was $46.26 when the Apr2010 credit-spread transaction occurred.

A possible overall performance result(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: +$1,807.80
= (300*($1.95+$.95-$.05+$1.15+$1.10+$.35-$1.35+$2.15) - 6*$11.20 commissions)
(b) Dividend Income: +$75.00 =($.125*2)*300 shares
(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 exercised at $45.00): -$1,105.15
= (+$1,807.80 +$75.00 -$2,987.95)

Absolute Return if Exercised at $45.00: -6.7%
= -$1,105.15/$16,487.95
Annualized Return If Exercised (ARIE) -11.8%
= (-$1,105.15/$16,487.95)*(365/207 days)

No comments:

Post a Comment