Wednesday, December 1, 2010

Petrobras (PBR) -- Continuation Transaction

Today, a decision was made to retain the 300 shares of Petrobras (PBR) and to establish a Dec2010 covered calls position. The transactions history for PBR as well as some possible results for this investment is as follows:

1. Petrobras (PBR) -- Continuation
The transactions history 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.
08/02/2010 +$57.90 Ex-Dividend = ($.193 Net Dividend x 300 shares)
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.
09/17/2010 Sep2010 Options Expired
09/20/2010 Sell-to-Open (STO) 3 PBR Oct2010 $37.00 Call Options @ $.63
Note: The price of PBR was $35.24 today when these options were sold.
10/16/2010 Oct2010 Options Expired
Note: Price of PBR at expiration was $34.29
10/18/2010 Sell-to-Open (STO) 3 PBR Nov2010 $36.00 Call Options @ $.62
Note: The price of PBR was $34.20 today when these call options were sold.
11/20/2010 Nov2010 Options Expired
Note: Price of PBR at expiration was $33.59
12/01/2010 Sell-to-Open (STO) 3 PBR Dec2010 $34.00 Call Options @ $.54
Note: The price of PBR was $33.05 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: +$1,123.80
= (300*($1.05+$.55+$.58+$.63+$.62+$.54) - 6*$11.20 commissions)
(b) Dividend Income: +$57.90 ($.193 * 300 shares) Net Ex-Dividend on 8/2/2010
(c) Capital Appreciation (If PBR unchanged at $33.05): $-1,892.95
= ($33.06-$39.34)*300 - $8.95 commissions
(c) Capital Appreciation (If PBR assigned at $34.00): -$1,610.95
= ($34.00-$39.34)*300 - $8.95 commissions

Total Net Profit(If PBR price unchanged at $33.05): -$711.25
= (+$1,123.80 +$57.90 -$1,892.95)
Total Net Profit(If PBR assigned at $34.00): -$429.25
= (+$1,123.80 +$57.90 -$1,610.95)

Absolute Return (If PBR unchanged at $33.05): -6.0%
= -$711.25/$11,810.95
Annualized Return If Unchanged (ARIU): -12.2%
= (-$711.25/$11,810.95)*(365/180 days)

Absolute Return (If Assigned at $34.00): -3.6%
= -$429.25/$11,810.95
Annualized Return If Assigned: -7.4%
= (-$429.25/$11,810.95)*(365/180 days)

2 comments:

  1. No big deal but I think your possible returns for petrobras are incorrect.

    ReplyDelete