Tuesday, June 22, 2010

Establish DSW Inc. Covered Calls

A new covered calls position was established in the Covered Calls Advisor Portfolio(CCAP) with the purchase of DSW Inc.(DSW) covered calls as follows:

Established DSW Inc.(DSW) Covered Calls for Jul2010:
06/22/2010 Bought 300 DSW @ $24.75
06/22/2010 Sold 3 DSW Jul2010 $25.00 Calls @ $1.10

DSW Inc., together with its subsidiaries, operates as a footwear specialty retailer in the United States. It offers dress, casual, and athletic footwear for women and men, as well as accessories, handbags, and hosiery. The company also sells shoes and accessories through dsw.com. As of January 30, 2010, it operated 305 DSW shoe stores; and 356 leased shoe departments for other retailers. The company was formerly known as Shonac Corporation and changed its name to DSW Inc. in February 2005. DSW Inc. was incorporated in 1969 and is based in Columbus, Ohio. As of January 31, 2009, DSW Inc. operated as a subsidiary of Retail Ventures, Inc.

The Buy Alerts spreadsheet below shows that DSW's financials are value-oriented at this time, and the total points rating of 18.22 is well above the Covered Calls Advisor's desired "Buy" threshold of 15.0.





















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


Some possible overall performance results(including commissions) for the DSW transactions would be as follows:
Stock Purchase Cost: $7,433.95
= ($24.75*300+$8.95 commission)

Net Profit:
(a) Options Income: +$318.80
= (300*$1.10 - $11.20 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock price unchanged at $24.75):
-$8.95 = ($24.75-$24.75)*300 - $8.95 commissions
(c) Capital Appreciation (If exercised at $25.00): +$66.05
= ($25.00-$24.75)*300 - $8.95 commissions

Total Net Profit(If stock price unchanged at $24.75): +$309.85
= (+$318.80 +$0.00 -$8.95)
Total Net Profit(If stock price exercised at $25.00): +$384.85
= (+$318.80 +$0.00 +$66.05)

Absolute Return if Unchanged at $24.75: +4.2%
= +$309.85/$7,433.95
Annualized Return If Unchanged (ARIU) +60.9%
= (+$309.85/$7,433.95)*(365/25 days)

Absolute Return if Exercised at $25.00: +5.2%
= +$384.85/$7,433.95
Annualized Return If Exercised (ARIE) +75.6%
= (+$384.85/$7,433.95)*(365/25 days)

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