Monday, August 22, 2011

August 2011 Expiration Results

The Covered Calls Advisor Portfolio (CCAP) contained a total of thirteen covered calls positions with August 2011 expirations, with the following results:

- Twelve covered calls positions in the CCAP (Best Buy Corp., General Motors Co., International Paper Co., iShares MSCI China ETF, iShares MSCI Emerging Markets ETF, iShares MSCI South Korea ETF, iShares MSCI Taiwan ETF, Microsoft Corp., Mylan Inc., Petrobras ADR, ProShares UltraShort 20+ Year Treasury ETF, and Valero Energy Corp.) ended out-of-the-money. Decisions will be made to either sell the equities, or to keep them and sell calls to establish September 2011 covered call positions. The related transactions will be made this week and the actual transactions will be posted on this blog site on the same day they occur.

- One covered calls position (China Mobile Ltd ADR) was in-the-money and was assigned (i.e. stock called away) upon option expiration last Friday. The detailed history for this position is provided below.

1. China Mobile Ltd ADR (CHL) -- Closed
The transactions history is as follows:
02/23/2011 Bought 200 CHL @ $46.479
02/23/2011 Sold 2 CHL Mar2011 $47.50 Calls @ $.60
03/19/2011 Mar2011 Options Expired
03/30/2011 Sold 2 CHL May2011 $47.50 Calls @ $.55
Note: price of CHL was $46.22 when these options were sold.
05/10/2011 Ex-dividend payment of $.9237 per share.
05/21/2011 May2011 Options Expiration will occur.
05/31/2011 Sold 2 CHL Jul2011 $47.50 Calls @ $.35
Note: The price of CHL was $45.59 when these call options were sold.
07/16/2011 Jul2011 CHL options expired.
07/18/2011 Sold 2 CHL Aug2011 $47.50 Calls @$.55
Note: The price of CHL was $46.45 when these call options were sold.

The result(including commissions) for the China Mobile Ltd ADR (CHL) transactions was as follows:

Stock Purchase Cost: $9,304.75
= ($46.479*200+$8.95 commission)

Net Profit:
(a) Options Income: +$368.20
= ($.60 + $.55 + $.35 + $.55)*200 shares - 4*$10.45 commissions
(b) Dividend Income: +$184.74 = $.9237 * 200 shares
(c) Capital Appreciation (CHL assigned at $47.50): +$195.25
+($47.50 -$46.479)*200 - $8.95 commissions

Total Net Profit(Stock assigned at $47.50 at Aug2011 options expiration): +$748.19
= (+$368.20 +$184.74 +$195.25)

Absolute Return (CHL assigned at $47.50): +8.0%
= +$748.19/$9,304.75
Annualized Return: +16.5%
= (+$748.19/$9,304.75)*(365/178 days)