Tuesday, September 20, 2011

Closed -- iShares MSCI Germany ETF

The Sep2011 covered calls position in iShares MSCI Germany ETF (symbol EWG) expired last Friday. Today, a decision was made to sell the 500 shares in the Covered Calls Advisor Portfolio. This investment has suffered greatly both because of surprisingly anemic German GDP growth during the past quarter as well as the European debt crisis. With the uncertainty surrounding the ultimate outcome of the debt crisis, European stock investments are likely to continue to underperform until this situation is resolved more completely. The detailed transactions history for this EWG position and the corresponding results are as follows:

The transactions history for the iShares MSCI Germany ETF (EWG) position:
07/18/2011 Bought 500 EWG @ $25.03
07/18/2011 Sold 5 EWG Sep2011 $26.00 Calls @ $.70
Note: The price of EWG was $25.06 when the options were sold.
09/17/2011 Sep2011 EWG options expired.
09/20/2011 Sold 500 EWG @ $19.16

The performance results(including commissions) for these EWG transactions was as follows:
Stock Purchase Cost: $12,523.95
= ($25.03*500+$8.95 commission)

Net Profit:
(a) Options Income: +$337.30
= (500*$.70 - $12.70 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation: -$2,943.95
= ($19.16-$25.03)*500 - $8.95 commissions

Total Net Profit: -$2,606.65
= (+$337.30 +$0.00 -$2,943.95)

Absolute Return: -20.8%
= -$2,606.65/$12,523.95
Annualized Return If Assigned (ARIA) -118.7%
= (-$2,606.65/$12,523.95)*(365/64 days)