Wednesday, December 1, 2010

iShares MSCI China ETF (FXI) -- Continuation Transaction

Today, a decision was made to retain the 1,100 shares of iShares MSCI China ETF (FXI)and to establish a Jan2011 covered calls position. The transactions history for FXI as well as some possible results for this investment is as follows:

1. iShares MSCI China ETF (FXI) -- Continuation Transaction
The transactions history 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 11 FXI Sep2010 $42.00 Call Options @ $.20
Note: The price of FXI was $40.52 today when these options were sold.
09/17/2010 Sep2010 Options Expired
09/20/2010 Sell-to-Open (STO) 11 FXI Oct2010 $43.00 Call Options @ $.62
Note: The price of FXI was $42.19 today when these options were sold.
10/14/2010 Buy-to-Close (BTC) 11 FXI Oct2010 $43.00 Call Options @ $2.69
10/14/2010 Sell-to-Open (STO) 11 FXI Nov2010 $47.00 Call Options @ $.85
11/20/2010 Nov2010 Options Expired
Note: The closing price of FXI was $44.66 on expiration Friday.
12/01/2010 Sell-to-Open (STO) 11 FXI Jan2011 $47.00 Call Options @ $.63
Note: The price of FXI was $44.41 today when these options were sold.
12/20/2010 Income Distribution $186.11 = ($.16919 * 1100 shares)

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: +$928.05
= (1,100*($.71+$.20+$.62-$2.69+$.85+$.63) + 700*$.73 + 400*$.40 - ($17.20*4 +$14.20 +$11.95) commissions)
(b) Distribution Income: +$186.11 = ($.16919 * 1100 shares)
(c) Capital Appreciation (If FXI unchanged at $44.66): +$3,082.05
= ($44.66-$41.85)*1,100 - $8.95 commissions
(c) Capital Appreciation (If all FXI shares are assigned at $47.00): +$5,656.05
= ($47.00-$41.85)*1,100 - $8.95 commissions

Total Net Profit (If FXI price unchanged at $44.66): +$4,196.21
= (+$928.05 +$186.11 +$3,082.05)
Total Net Profit (If FXI assigned at $47.00): +$6,770.21
= (+$928.05 +$186.11 +$5,656.05)

Absolute Return (If FXI unchanged at $44.66): +9.1%
= +$4,196.21/$46,043.95
Annualized Return If Unchanged (ARIU): +15.5%
= (+$4,196.21/$46,043.95)*(365/215 days)

Absolute Return (If Assigned at $47.00): +14.7%
= +$6,770.21/$46,043.95
Annualized Return If Assigned (ARIA): +25.0%
= (+$6,770.21/$46,043.95)*(365/215 days)

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