Thursday, September 2, 2010

Continuation Transactions -- Best Buy Co. Inc., iShares MSCI China ETF, Neutral Tandem Inc., and ProShares UltraShort 20+ Year Treasury ETF

Today, shares in Best Buy Co. Inc.(BBY), iShares MSCI China ETF (FXI), Neutral Tandem Inc.(TNDM), and ProShares UltraShort 20+ Year Treasury ETF (TBT) 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. Best Buy Co Inc.(BBY) -- Continuation Transaction

The transactions history to date for Best Buy Co Inc.(BBY) is as follows:
06/23/2010 Bought 400 BBY @ $36.08
06/23/2010 Sold 4 BBY Jul2010 $37.00 Calls @ $.82
07/17/2010 Jul2010 Options Expired
Note: The closing price of BBY was $34.33 on expiration Friday.
07/22/2010 Sold 4 BBY Aug2010 $35.00 Calls @ $1.06
Note: The price of BBY was $34.68 today when this option was sold.
08/21/2010 Aug2010 Option Expired
Note: The closing price of BBY was $32.50 on expiration Friday.
09/02/2010 Sold 4 BBY Sep2010 $34.00 Call Options @ $.64
Note: The price of BBY was $33.07 today when these options were sold.

Two possible overall performance results(including commissions) for Best Buy Co Inc.(BBY) transactions would be as follows:
Stock Purchase Cost: $14,440.95
= ($36.08*400+$8.95 commission)

Net Profit:
(a) Options Income: +$972.15
= 400*($.82+$1.06+$.64) - 3*$11.95
(c) Capital Appreciation (If BBY unchanged at $33.07): -$1,212.95
= ($33.07-$36.08)*400 - $8.95 commissions
(c) Capital Appreciation (If BBY assigned at $34.00): -$840.95
= ($34.00-$36.08)*400 - $8.95 commissions

Total Net Profit(If BBY price unchanged at $33.07): -$240.80
= (+$972.15 +$0.00 -$1,212.95)
Total Net Profit(If BBY assigned at $34.00): +$131.20
= (+$972.15 +$0.00 -$840.95)

Absolute Return (If BBY unchanged at $33.07): -1.7%
= -$240.80/$14,440.95
Annualized Return If Unchanged (ARIU): -6.8%
= (-$240.80/$14,440.95)*(365/89 days)

Absolute Return if Exercised at $35.00: +0.9%
= +$131.20/$14,440.95
Annualized Return If Exercised (ARIE): +3.7%
= (+$131.20/$14,440.95)*(365/89 days)


2. iShares MSCI China ETF (FXI) -- Continuation Transaction

The transactions history to date for iShares MSCI China ETF (FXI) is as follows:
06/21/2010 Bought 1,100 FXI @ $41.85
06/21/2010 Sold 11 FXI Jul2010 $43.00 Calls @ $.71
7/17/2010 Jul2010 Options Expired
Note: The closing price of FXI was $38.74 on expiration Friday.
07/22/2010 Sold 7 FXI Aug2010 $42.00 Calls @ $.73
07/22/2010 Sold 4 FXI Aug2010 $43.00 Calls @ $.42
Note: The price of FXI was $41.02 today when these options were sold.
08/21/2010 Aug2010 Option Expired
Note: The closing price of FXI was $40.54 on expiration Friday.
09/02/2010 Sold 4 FXI Sep2010 $42.00 Call Options @ $.20
Note: The price of FXI was $40.52 today when these options were sold.

Some possible overall performance results(including commissions) for the iShares MSCI China ETF (FXI) transactions would be as follows:
Stock Purchase Cost: $46,043.95
= ($41.85*1,100+$8.95 commission)

Net Profit:
(a) Options Income: +$966.60
= (1,100*($.71+$.20) + 700*$.73 + 4008$.40 - ($17.20*2 +$14.20 +$11.95) commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If FXI unchanged at $40.52): $-1,471.95
= ($40.52-$41.85)*1,100 - $8.95 commissions
(c) Capital Appreciation (If all FXI shares are assigned with price above $42.00): +$156.05 = ($42.00-$41.85)*1,100 - $8.95 commissions

Total Net Profit(If FXI price unchanged at $40.52): -$505.35
= (+$966.60 +$0.00 -$1,471.95)
Total Net Profit(If FXI assigned at $42.00): +$1,122.65
= (+$966.60 +$0.00 +$156.05)

Absolute Return (If FXI unchanged at $40.52): -1.1%
= -$505.35/$46,043.95
Annualized Return If Unchanged (ARIU): -4.4%
= (-$505.35/$46,043.95)*(365/91 days)

Absolute Return if Exercised at $42.00: +2.4%
= +$1,122.65/$46,043.95
Annualized Return If Exercised (ARIE): +9.8%
= (+$1,122.65/$46,043.95)*(365/91 days)


3. Neutral Tandem Inc.(TNDM) -- Continuation Transaction

The transactions history to date for the Neutral Tandem Inc.(TNDM) covered calls is as follows:
07/19/2010 Bought 500 TNDM @ $11.78
07/19/2010 Sold 5 TNDM Aug2010 $12.50 Calls @ $.35
08/21/2010 Aug2010 Option Expired
Note: The closing price of TNDM was $12.09 on expiration Friday.
09/02/2010 Sold 5 TNDM Sep2010 $12.50 Call Options @ $.15
Note: The price of TNDM was $11.61 today when these options were sold.

Some possible overall performance results(including commissions) for the TNDM transactions would be as follows:
Stock Purchase Cost: $5,898.95
= ($11.78*500+$8.95 commission)

Net Profit:
(a) Options Income: +$224.60
= (500*($.35+$.15) - 2*$12.70 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock price unchanged at $11.61):
-$93.95 = ($11.61-$11.78)*500 - $8.95 commissions
(c) Capital Appreciation (If exercised at $12.50): +$351.05
= ($12.50-$11.78)*500 - $8.95 commissions

Total Net Profit(If stock price unchanged at $11.61): +$130.65
= (+$224.60 +$0.00 -$93.95)
Total Net Profit(If stock price exercised at $12.50): +$575.65
= (+$224.60 +$0.00 +$351.05)

Absolute Return if Unchanged at $11.61: +2.2%
= +$130.65/$5,898.95
Annualized Return If Unchanged (ARIU) +13.0%
= (+$130.65/$5,898.95)*(365/63 days)

Absolute Return if Exercised at $12.50: +9.8%
= +$575.65/$5,898.95
Annualized Return If Exercised (ARIE) +56.5%
= (+$575.65/$5,898.95)*(365/63 days)


4. ProShares UltraShort 20+ Year Treasury ETF -- Continuation Transaction

The transactions history to date for the ProShares UltraShort 20+ Year Treasury ETF (TBT) covered calls is as follows:
07/19/2010 Bought 300 TBT @ $35.92
07/19/2010 Sold 3 TBT Aug2010 $38.00 Calls @ $.35
08/21/2010 Aug2010 Option Expired
Note: The closing price of TBT was $31.69 on expiration Friday.
09/02/2010 Sold 3 TBT Sep2010 $33.00 Call Options @ $.55
Note: The price of TBT was $32.04 today when these options were sold.

Two possible overall performance results(including commissions) for the TBT transactions would be as follows:
Stock Purchase Cost: $10,784.95
= ($35.92*300+$8.95 commission)

Net Profit:
(a) Options Income: +$247.60
= 300*($.35+$.55) - 2*$11.20 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If TBT unchanged at $32.04):
-$1,172.95 = ($32.04-$35.92)*300 - $8.95 commissions
(c) Capital Appreciation (If TBT exercised at $33.00): -$884.95
= ($33.00-$35.92)*300 - $8.95 commissions

Total Net Profit(If TBT unchanged at $32.04): -$925.35
= (+$247.60 +$0.00 -$1,172.95)
Total Net Profit(If TBT exercised at $33.00): -$637.35
= (+$247.60 +$0.00 -$884.95)

Absolute Return if Unchanged at $32.04: -8.6%
= -$925.35/$10,784.95
Annualized Return If Unchanged (ARIU) -51.3%
= (-$925.35/$10,784.95)*(365/61 days)

Absolute Return if Exercised at $33.00: -5.9%
= -$637.35/$10,784.95
Annualized Return If Exercised (ARIE) -35.4%
= (-$637.35/$10,784.95)*(365/61 days)

No comments:

Post a Comment