Tuesday, October 25, 2011

Establish iShares MSCI South Korea ETF Covered Calls

A new covered calls position was established today in the Covered Calls Advisor Portfolio(CCAP) with the purchase of iShares MSCI South Korea ETF (EWY) covered calls as follows:

Established iShares MSCI South Korea ETF (EWY) Covered Calls for Nov2011:
10/25/2011 Bought 800 EWY @ $54.62
10/25/2011 Sold 8 EWY Nov2011 $54.00 Calls @ $2.59
Note: these call options were sold with the price of EWY at $54.62

A possible overall performance result(including commissions) for the EWY transaction would be as follows:
Stock Purchase Cost: $43,704.95
= ($54.62*800+$8.95 commission)

Net Profit:
(a) Options Income: +$2,057.05
= (800*$2.59 - $14.95 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If EWY assigned at $54.00): -$504.95
= ($54.00-$54.62)*800 - $8.95 commissions

Total Net Profit(If EWY assigned at $54.00): +$1,552.10
= (+$2,057.05 +$0.00 -$504.95)

Absolute Return if Assigned at $54.00: +3.6%
= +$1,552.10/$43,704.95
Annualized Return If Assigned (ARIA): +51.8%
= (+$1,552.10/$43,704.95)*(365/25 days)

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