Monday, May 24, 2010

Establish Symantec Corp. Covered Calls

A new covered call position was established today in the Covered Calls Advisor Portfolio(CCAP) with Symantec Corp.(SYMC) as follows:

05/24/2010 Bought 400 SYMC @ $14.51
05/24/2010 Sold 4 SYMC Jun2010 $15.00 Call Options @ $.48

Symantec Corporation is a leading software provider of security, storage, and systems management solutions that enable companies and consumers to protect their network infrastructure from security threats. It operates in four segments: Consumer, Security and Compliance, Storage and Server Management, and Services. The Consumer segment provides consumer security software suites and services, primarily under the Norton AntiVirus Software brand which currently has a 53% market share in this segment. The Security and Compliance segment provides software solutions for enterprise security, endpoint management, and archiving applications. The Storage and Server Management segment focuses on providing storage management, high availability, and backup and recovery solutions in heterogeneous storage and server platforms to enterprise customers. The Services segment offers consulting services, which include advisory, product enablement, and residency services to enable customers to assess, design, transform, and operate their infrastructure. In addition, it offers maintenance support contracts, including content, upgrades, and technical support to enterprises; and self-help online services, phone, chat, email support, and fee-based premium support and diagnostic services to consumers. The company markets and sells its products through distributors, retailers, direct marketers, Internet-based resellers, original equipment manufacturers, system builders, and Internet service providers; and its e-commerce channels, as well as direct sales force, value-added and large account resellers, and system integrators. It has operations in the Americas, which includes the United States, Canada, and Latin America; EMEA that comprise Europe, the Middle East, and Africa; and the Asia Pacific-Japan. Symantec Corporation was founded in 1982 and is headquartered in Cupertino, California.

The Covered Calls Advisor's "Buy Alerts" spreadsheet below shows that the total points of 15.14 exceeds the minimum purchase threshold of 15 points for a new investment.

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

Two possible overall performance results(including commissions) for the SYMC transactions would be as follows:
Stock Purchase Cost: $5,812.95
= ($14.51*400+$8.95 commission)

Net Profit:
(a) Options Income: +$180.05
= 400*$.48 - $11.95 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock price unchanged at $14.51):
-$8.95 = ($14.51-$14.51)*400 - $8.95 commissions
(c) Capital Appreciation (If exercised at $15.00): +$187.05
= ($15.00-$14.51)*400 - $8.95 commissions

Total Net Profit(If stock price unchanged at $14.51): +$171.10
= (+$180.05 +$0.00 -$8.95)
Total Net Profit(If stock price exercised at $15.00): +$367.10
= (+$180.05 +$0.00 +$187.05)

Absolute Return if Unchanged at $14.51: +2.9%
= +$171.10/$5,812.95
Annualized Return If Unchanged (ARIU) +41.3%
= (+$171.10/$5,812.95)*(365/26 days)

Absolute Return if Exercised at $15.00: +6.3%
= +$367.10/$5,812.95
Annualized Return If Exercised (ARIE) +88.7%
= (+$367.10/$5,812.95)*(365/26 days)

Downside Breakeven Price Point: $14.03
Downside Breakeven Protection: 3.3%