Monday, October 24, 2011

Closed -- Alcoa Inc.

The Oct2011 covered calls position in Alcoa Inc.(AA) expired last Friday. Today, a decision was made to sell the 500 shares in the Covered Calls Advisor Portfolio. The detailed transactions history and associated results for this AA position are as follows:

The transactions history for the Alcoa Inc.(AA) position:
08/26/2011 Bought 500 AA @ $11.49
08/26/2011 Sold 5 AA Sep2011 $12.00 Calls @ $.42
Note: the price of AA was $11.60 when the call options were sold.
09/17/2011 Sep2011 options expired.
09/20/2011 Sold 5 AA Oct2011 $11.00 Calls @ $.82
Note: the price of AA was $11.48 when the call options were sold.
10/22/2011 Oct2011 options expired.
Note: the price of AA was $10.23 at options expiration.
10/24/2011 Sold 500 AA @ $10.49

The overall performance result (including commissions) for the Alcoa Inc.(AA) transactions was as follows:
Stock Purchase Cost: $5,753.95
= ($11.49*500+$8.95 commission)

Net Profit:
(a) Options Income: +$594.60
= (500*($.42+$.82) - 2*$12.70 commissions)
(b) Dividend Income: +$15.00 = $.03 * 500 shares
(c) Capital Appreciation (AA sold at $10.49): -$508.95
= ($10.49-$11.49)*500 - $8.95 commissions

Total Net Profit (AA sold at $10.49): +$100.65
= (+$594.60 +$15.00 -$508.95)

Absolute Return (AA sold at $10.49): +1.7%
= +$100.65/$5,753.95
Annualized Return: +10.8%
= (+$100.65/$5,753.95)*(365/59 days)

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