Wednesday, September 1, 2010

Continuation Transactions -- Apple Inc., Cubist Pharmaceuticals, and Petrobras

Today, shares in Apple Inc.(AAPL), Cubist Pharmaceuticals (CBST), and Petrobras(PBR) were retained and call options were sold to establish Sept2010 covered calls positions in them. The transactions history as well as some possible results for each position are detailed below:

1. Apple Inc.(AAPL) -- Continuation Transaction

The transactions history to date for Apple Inc.(AAPL) is as follows:
02/24/2010 Bought 100 AAPL @ $198.677
02/24/2010 Sold 1 AAPL Mar2010 $210.00 Call @ $1.57
Roll-Up-and-Out Transaction:
03/19/2010 Buy-to-Close (BTC) 1 AAPL Mar2010 $210.00 @ $12.20
03/19/2010 Sell-to-Open (STO) 1 AAPL Apr2010 $230.00s @ $3.40
Note: The price of AAPL was $222.18 today when this debit-spread was transacted.
04/16/2010 Buy-to-Close (BTC) 1 AAPL Apr2010 $230.00 @ $19.00
04/16/2010 Sell-to-Open (STO) 1 AAPL May2010 $250.00 @ $9.40
Note: The price of AAPL was $248.90 today when this debit-spread was transacted.
5/22/2010 May2010 Option Expired
Note: The closing price of AAPL was $242.32 on expiration Friday
6/01/2010 Sold 1 AAPL Jun2010 $260.00 @ $9.50
Note: The price of AAPL was approximately $261.35 when this option was sold.
6/18/2010 Buy-to-Close (BTC) 1 AAPL Jun2010 $260.00 @ $13.90
6/18/2010 Sell-to-Open (STO) 1 AAPL Jul2010 $280.00 @ $7.50
Note: The price of AAPL was $273.88 today when this debit-spread was transacted.
07/17/2010 Jul2010 Option Expired
Note: The closing price of AAPL was $249.90 on expiration Friday.
07/22/2010 Sold 1 AAPL Aug2010 $270.00 Call @ $4.35
Note: The price of AAPL was $258.02 today when this option was sold.
08/21/2010 Aug2010 Option Expired
Note: The closing price of AAPL was $249.64 on expiration Friday.
09/01/2010 Sold 1 AAPL Sept2010 $270.00 Call Option @ $.68
Note: The price of AAPL was $251.35 today when this option was sold.

Two possible overall performance results(including commissions) for the Apple Inc. (AAPL) transactions would be as follows:
Stock Purchase Cost: $19,876.65
= ($198.677*100+$8.95 commission)

Net Profit:
(a) Options Income: -$937.90
= (100*($1.57-$12.20+$3.40-$19.00+$9.40+$9.50-$13.90+$7.50+$4.35+$.68) - 7*$9.70 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock price unchanged at $251.35): +$5,258.35
= ($251.35-$198.677)*100 - $8.95 commissions
(c) Capital Appreciation (If stock called away at $270.00): +$7,123.35
= ($270.00-$198.677)*100 - $8.95 commissions

Total Net Profit(If stock price unchanged at $251.35): +$4,320.45
= (-$937.90 +$0.00 +$5,258.35)
Total Net Profit(If stock price exercised at $270.00): +$6,185.45
= (-$937.90 +$0.00 +$7,123.35)

Absolute Return (If Stock unchanged at $251.35): +21.7%
= +$4,320.45/$19,876.65
Annualized Return If Exercised (ARIE) +38.5%
= (+$4,320.45/$19,876.65)*(365/206 days)

Absolute Return (If Stock exercised at $270.00): +31.1%
= +$6,185.45/$19,876.65
Annualized Return If Exercised (ARIE) +55.1%
= (+$6,185.45/$19,876.65)*(365/206 days)


2. Cubist Pharmaceuticals(CBST) -- Continuation Transaction

The transactions history to date for Cubist Pharmaceuticals(CBST) is as follows:
06/25/2010 Bought 300 CBST @ $21.31
06/25/2010 Sold 3 CBST Jul2010 $22.50 Calls @ $.50
07/17/2010 Jul2010 Options Expired
Note: The closing price of CBST was $21.37 on expiration Friday.
07/22/2010 Sold 3 CBST Aug2010 $22.50 Calls @ $.60
Note: The price of CBST was $21.24 today when this option was sold.
08/21/2010 Aug2010 Options Expired
Note: The closing price of CBST was $22.22 on expiration Friday.
09/01/2010 Sold 3 CBST Sept2010 $22.50 Call Options @ $.60
Note: The price of CBST was $22.48 today when these call options were sold.

Two possible overall performance results(including commissions) for the Cubist Pharmaceuticals(CBST) transactions would be as follows:
Stock Purchase Cost: $6,401.95
= ($21.31*300+$8.95 commission)

Net Profit:
(a) Options Income: +$476.40
= (300*($.50+$.60+$.60) - 3*$11.20 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock price unchanged at $22.48):
+$342.05 = ($22.48-$21.31)*300 - $8.95 commissions
(c) Capital Appreciation (If exercised at $22.50): +$348.05
= ($22.50-$21.31)*300 - $8.95 commissions

Total Net Profit(If stock price unchanged at $22.48): +$818.45
= (+$476.40 +$0.00 +$342.05)
Total Net Profit(If stock price exercised at $22.50): +$824.45
= (+$476.40 +$0.00 +$348.05)

Absolute Return if Unchanged at $22.48: +12.8%
= +$818.45/$6,401.95
Annualized Return If Unchanged (ARIU) +54.9%
= (+$818.45/$6,401.95)*(365/85 days)

Absolute Return if Exercised at $22.50: +12.9%
= +$824.45/$6,401.95
Annualized Return If Exercised (ARIE) +55.3%
= (+$824.45/$6,401.95)*(365/85 days)


3. Petrobras (PBR) -- Continuation Transaction

The transactions history to date for Petrobras (PBR) is as follows:
06/21/2010 Bought 300 PBR @ $39.34
06/21/2010 Sold 3 PBR Jul2010 $40.00 Calls @ $1.05
7/17/2010 Jul2010 Options Expired
Note: The closing price of PBR was $34.51 on expiration Friday.
07/22/2010 Sold 3 PBR Aug2010 $38.00 Calls @ $.55
Note: The price of PBR was $36.52 today when these options were sold.
08/21/2010 Aug2010 Options Expired
Note: The closing price of PBR was $34.42 on expiration Friday.
09/01/2010 Sold 3 PBR Sept2010 $36.00 Call Options @ $.58
Note: The price of PBR was $35.20 today when these call options were sold.

Two possible overall performance results(including commissions) for the Petrobras (PBR) transactions would be as follows:
Stock Purchase Cost: $11,810.95
= ($39.34*300+$8.95 commission)

Net Profit:
(a) Options Income: +$620.40
= (300*($1.05+$.55+$.58) - 3*$11.20 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If PBR unchanged at $35.20): $-1,250.95
= ($35.20-$39.34)*300 - $8.95 commissions
(c) Capital Appreciation (If PBR assigned at $36.00): -$1,010.95
= ($36.00-$39.34)*300 - $8.95 commissions

Total Net Profit(If PBR price unchanged at $35.20): -$630.55
= (+$620.40 +$0.00 -$1,250.95)
Total Net Profit(If PBR assigned at $36.00): -$390.55
= (+$620.40 +$0.00 -$1,010.95)

Absolute Return (If PBR unchanged at $35.20): -5.3%
= -$630.55/$11,810.95
Annualized Return If Unchanged (ARIU): -21.9%
= (-$630.55/$11,810.95)*(365/89 days)

Absolute Return if Exercised at $36.00: -3.3%
= -$390.55/$11,810.95
Annualized Return If Exercised (ARIE): -13.6%
= (-$390.55/$11,810.95)*(365/89 days)

No comments:

Post a Comment