Search This Blog

Wednesday, September 1, 2010

Continuation Transaction -- Symantec Corporation

Today, shares in Symantec Corporation (SYMC) were retained and call options were sold to establish Oct2010 covered calls positions. Normally, the Covered Calls Advisor establishes near-month (in this case that would be Sep2010) covered calls. But the Sep2010 slightly-out-of-the-money $15.00 strike price call option premium was less than the minimum desired value of $.30, so the position was extended to Oct2010 expiration with a $.44 options premium received. The transactions history as well as some possible results for this SYMC position is detailed below:

1. Symantec Corporation (SYMC) -- Continuation Transaction

The transactions history to date for Symantec Corporation (SYMC) is as follows:
06/23/2010 Bought 300 SYMC @ $14.70
06/23/2010 Sold 3 SYMC Jul2010 $15.00 Call Options @ $.31
7/17/2010 Jul2010 Options Expired
Note: The closing price of SYMC was $14.59 on expiration Friday.
07/22/2010 Sold 3 SYMC Aug2010 $15.00 Calls @ $.54
Note: The price of SYMC was $14.86 today when these options were sold.
08/21/2010 Aug2010 Option Expired
Note: The closing price of SYMC was $13.80 on expiration Friday.
09/01/2010 Sold 3 SYMC Oct2010 $15.00 Call Options @ $.44
Note: The price of SYMC was $14.07 today when these options were sold.

Two possible overall performance results(including commissions) for the Symantec Corporation (SYMC) transactions would be as follows:
Stock Purchase Cost: $4,418.95
= ($14.70*300+$8.95 commission)

Net Profit:
(a) Options Income: +$353.40
= 300*($.31+$.54+$.44) - 3*$11.20 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock price unchanged at $14.07):
-$197.95 = ($14.07-$14.70)*300 - $8.95 commissions
(c) Capital Appreciation (If exercised at $15.00): +$81.05
= ($15.00-$14.70)*300 - $8.95 commissions

Total Net Profit(If stock price unchanged at $14.07): +$155.45
= (+$353.40 +$0.00 -$197.95)
Total Net Profit(If stock price exercised at $15.00): +$434.45
= (+$353.40 +$0.00 +$81.05)

Absolute Return if Unchanged at $14.07: +3.5%
= +$155.45/$4,418.95
Annualized Return If Unchanged (ARIU) +11.2%
= (+$155.45/$4,418.95)*(365/115 days)

Absolute Return if Exercised at $15.00: +9.8%
= +$434.45/$4,418.95
Annualized Return If Exercised (ARIE) +31.2%
= (+$434.45/$4,418.95)*(365/115 days)

No comments:

Post a Comment