Tuesday, September 20, 2011

Continuation Transactions -- General Motors Co., iShares MSCI China ETF, iShares MSCI Emerging Markets ETF, Morgan Stanley, and Mylan Inc.

Upon Sep2011 options expiration last Friday, ten of the fourteen total covered calls positions in the Covered Calls Advisor Portfolio (CCAP) expired. Today, a decision was made to re-establish covered calls positions for five equities (General Motors Co., iShares MSCI China ETF, iShares MSCI Emerging Markets ETF, Morgan Stanley, and Mylan Inc.) with Oct2011 expirations. The detailed transactions history for these positions as well as possible results for these investments are as follows:

1. General Motors Co.(GM) -- Continuation
The transactions history is as follows:
07/20/2011 Bought 300 GM @ $29.32
07/20/2011 Sold 3 GM Aug2011 $30.00 Calls @ $.79
Note: the price of GM was $29.45 when the call options were sold.
08/20/2011 Aug2011 GM options expired.
08/22/2011 Sold 3 GM Sep2011 $24.00 Calls @ $.65
09/17/2011 Sep2011 GM options expired.
09/20/2011 Sold 3 GM Oct2011 $24.00 Calls @ $.57
Note: The price of GM was $22.80 when the options were sold.

Some possible performance results(including commissions) for these GM transactions are as follows:
Stock Purchase Cost: $8,804.95
= ($29.32*300+$8.95 commission)

Net Profit:
(a) Options Income: +$537.90
= (300*($.70+$.65+$.57) - 3*$12.70 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock price unchanged at $22.80): -$1,964.95
= ($22.80-$29.32)*300 - $8.95 commissions
(c) Capital Appreciation (If stock assigned at $24.00 at expiration): -$1,604.95
= ($24.00-$29.32)*300 - $8.95 commissions

Total Net Profit (If stock price unchanged at $22.80): -$1,427.05
= (+$537.90 +$0.00 -$1,964.95)
Total Net Profit (If stock assigned at $24.00): -$1,067.05
= (+$537.90 +$0.00 -$1,604.95)

1. Absolute Return (If stock price unchanged at $22.80): -16.2%
= -$1,427.05/$8,804.95
Annualized Return If Assigned (ARIA) -95.4%
= (-$1,427.05/$8,804.95)*(365/62 days)

2. Absolute Return (If stock assigned at $24.00 strike price): -12.1%
= -$1,067.05/$8,804.95
Annualized Return If Assigned (ARIA): -71.3%
= (-$1,067.05/$8,804.95)*(365/62 days)


2. iShares MSCI China ETF (FXI) -- Continuation
The transactions history is as follows:
The transactions history is as follows:
04/18/2011 Bought 1,000 FXI @ $44.80
04/20/2011 Sold 10 FXI May2011 $47.00 Calls @ $.49
Note: the price of FXI was $45.88 when the calls were sold.
05/31/2011 Sold 10 FXI Jul2011 $47.00 Calls @ $.37
Note: The price of FXI was $45.18 when these call options were sold.
06/21/2011 FXI ETF distribution of $.68555 per share
07/16/2011 Jul2011 FXI options expired.
07/18/2011 Sold 10 FXI Aug2011 $42.00 Calls @$.71
08/20/2011 Aug2011 FXI options expired.
08/22/2011 Sold 10 FXI Sep2011 $42.00 Calls @ $.65
09/17/2011 Sep2011 FXI options expired.
09/20/2011 Sold 10 FXI Oct2011 $38.00 Calls @ $.47

Two possible overall performance results(including commissions) for these iShares MSCI China ETF (FXI) transactions would be as follows:
Stock Purchase Cost: $44,808.95
= ($44.80*1,000+$16.45 commission)

Net Profit:
(a) Options Income: +$2,626.50
= (1,000*($.49+$.37+$.71+$.65+$.47) - 5*$12.70 commissions)
(b) Distribution Income: $685.55 = $.68555 * 1,000 shares
(c) Capital Appreciation (If FXI price unchanged at $35.29 at expiration): -$9,518.95
= ($35.29-$44.80)*1,000 - $8.95 commissions
(c) Capital Appreciation (If FXI assigned at $38.00 at expiration): -$6,808.95
= ($38.00-$44.80)*1,000 - $8.95 commissions

Total Net Profit (If FXI price unchanged at $35.29 at expiration): -$6,206.90
= (+$2,626.50 +$685.55 -$9,518.95)
Total Net Profit (If FXI assigned at $38.00): -$2,894.85
= (+$2,626.50 +$685.55 -$6,206.90)

1. Absolute Return (If FXI unchanged at $35.29 at expiration): -13.9%
= -$6,206.90/$44,808.95
Annualized Return (If FXI unchanged at expiration): -27.0%
= (-$6,206.90/$44,808.95)*(365/187 days)

2. Absolute Return (If FXI assigned at $38.00 at expiration): -6.5%
= -$2,894.85/$44,808.95
Annualized Return If Assigned (ARIA): -12.6%
= (-$2,894.85/$44,808.95)*(365/187 days)


3. iShares MSCI Emerging Markets ETF (FXI) -- Continuation
The transactions history is as follows:
04/18/2011 Bought 500 EEM @ $47.81
04/19/2011 Sold 5 EEM May2011 $49.00 Calls @ $.83
Note: the price of EEM was $48.32 when the calls were sold.
05/27/2011 Sold 5 EEM Jun2011 $49.00 Calls @ $.44
Note: the price of EEM was $47.83 when the calls were sold.
06/18/2011 Jun2011 Options Expired
Note: the price of EEM was $45.34 upon options expiration.
6/22/2011 Distribution Income $.46092 per share.
06/28/2011 Sold 5 EEM Jul2011 $47.00 Calls @ $.62
Note: price of EEM was $46.42 when these options were sold.
07/16/2011 Jul2011 EEM options expired.
07/18/2011 Sold 5 EEM Aug2011 $47.00 Calls @$.99
Note: The price of EEM was $46.55 when these call options were sold.
08/20/2011 Aug2011 EEM options expired.
08/22/2011 Sold 5 EEM Sep2011 $42.00 Calls @ $.71
09/17/2011 Sep2011 EEM options expired.
09/20/2011 Sold 5 EEM Oct2011 $42.00 Calls @ $.63
Note: The price of EEM was $39.68 when these call options were sold.

Two possible overall performance results(including commissions) for these iShares MSCI Emerging Markets ETF (EEM) transactions would be as follows:
Stock Purchase Cost: $23,913.95
= ($47.81*500+$8.95 commission)

Net Profit:
(a) Options Income: +$1,988.80
= [500*($.83 +$.35+$.62+$.99+$.71+$.63) - 6*$12.70 commissions]
(b) Distribution Income: $230.46 = $.46092 * 500 shares
(c) Capital Appreciation (If EEM unchanged at $39.68 at expiration): -$4,073.95
= ($39.68-$47.81)*500 - $8.95 commissions
(c) Capital Appreciation (If stock assigned at $42.00): -$2,913.95
= ($42.00-$47.81)*500 - $8.95 commissions

Total Net Profit (If EEM price unchanged at $39.68 at expiration): -$1,854.69
= (+$1,988.80 +$230.46 -$4,073.95)
Total Net Profit (If EEM assigned at $42.00): -$694.69
= (+$1,988.80 +$230.46 -$2,913.95)

1. Absolute Return (If stock unchanged at $39.68 at expiration): -7.8%
= -$1,854.69/$23,913.95
Annualized Return (If stock unchanged at expiration): -15.1%
= (-$1,854.69/$23,913.95)*(365/187 days)

2. Absolute Return (If stock assigned at $42.00 at expiration): -2.9%
= -$694.69/$23,913.95
Annualized Return If Assigned (ARIA): -5.7%
= (-$694.69/$23,913.95)*(365/187 days)


4. Morgan Stanley (MS) -- Continuation
The transactions history is as follows:
06/03/2011 Bought 300 MS @ $22.988
06/03/2011 Sold 3 MS Jul2011 $25.00 Calls @ $.26
Note: the price of MS was $23.14 when the call options were sold.
07/16/2011 Jul2011 MS options expired.
07/18/2011 Sold 3 MS Sep2011 $22.00 Calls @$.66
Note: The price of MS was $20.82 when these call options were sold.
07/27/2011 Ex-Dividend of $.05 per share
09/17/2011 Sep2011 MS options expired.
09/20/2011 Sold 3 MS Oct2011 $17.00 Calls @ $.42
Note: The price of MS was $15.41 when these call options were sold.

Two possible overall performance results(including commissions) for the Morgan Stanley transactions would be as follows:
Stock Purchase Cost: $6,905.35
= ($22.988*300+$8.95 commission)

Net Profit:
(a) Options Income: +$276.40
= 300*($.26+$.66+$.42) - 3*$11.20 commissions
(b) Dividend Income: +$15.00 = $.05 * 300 shares
(c) Capital Appreciation (If MS unchanged at $15.41):
-$2,282.35 = ($15.41-$22.988)*300 - $8.95 commissions
(c) Capital Appreciation (If MS exercised at $17.00): -$1,805.35
= ($17.00-$22.988)*300 - $8.95 commissions

Total Net Profit(If MS unchanged at $15.41): -$1,990.95
= (+$276.40 +$15.00 -$2,282.35)
Total Net Profit(If MS exercised at $17.00): -$1,513.95
= (+$276.40 +$15.00 -$1,805.35)

1. Absolute Return if Unchanged at $15.41: -28.8%
= -$1,990.95/$6,905.35
Annualized Return If Unchanged (ARIU) -74.6%
= (-$1,990.95/$6,905.35)*(365/141 days)

2. Absolute Return if Assigned at $17.00: -21.9%
= -$1,513.95/$6,905.35
Annualized Return If Assigned (ARIA): -56.8%
= (-$1,513.95/$6,905.35)*(365/141 days)


5. Mylan Inc. -- Continuation
The transactions history is as follows:
07/18/2011 Sold 5 Mylan Inc. (MYL) Aug2011 $23.00 Put Options @ $1.06
Note: the price of MYL stock was $22.98 today when these puts were sold.
08/20/2011 Aug2011 MYL options exercised and stock purchased at $23.00 per share.
08/22/2011 Sold 5 MYL Sep2011 $22.00 Calls @ $.46
09/17/2011 Sep2011 MYL options expired.
09/20/2011 Sold 5 MYL Oct2011 $22.00 Calls @ $.63
Note: The price of MYL was $20.48 when these call options were sold.

Two possible overall performance results(including commissions) for the Mylan Inc. transactions would be as follows:
Stock Purchase Cost: $11,508.95
= ($23.00*500+$8.95 commission)

Net Profit:
(a) Options Income: +$1,036.90
= 500*($1.06+$.46+$.63) - 3*$12.70 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If MYL unchanged at $20.48):
-$1,268.95 = ($20.48-$23.00)*500 - $8.95 commissions
(c) Capital Appreciation (If MS exercised at $17.00): -$508.95
= ($22.00-$23.00)*500 - $8.95 commissions

Total Net Profit(If MYL unchanged at $20.48): -$232.05
= (+$1,036.90 +$0.00 -$1,268.95)
Total Net Profit(If MYL exercised at $22.00): +$527.95
= (+$1,036.90 +$0.00 -$508.95)

1. Absolute Return if Unchanged at $20.48: -2.0%
= -$232.05/$11,508.95
Annualized Return If Unchanged (ARIU) -7.7%
= (-$232.05/$11,508.95)*(365/96 days)

2. Absolute Return if Assigned at $22.00: +4.6%
= +$527.95/$11,508.95
Annualized Return If Assigned (ARIA): +17.4%
= ($527.95/$11,508.95)*(365/96 days)

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