Monday, January 30, 2012

Closed -- Juniper Networks Inc. Covered Calls

The Feb2012 covered calls position in Juniper Networks Inc.(JNPR) was established last week prior to its earnings report. The earnings report was lousy. Not only were the quarterly results below expectations, but even more importantly, the forward guidance was grim. In short, Juniper's fundamentals have changed for the worse; so today, the covered calls position in Juniper Networks was exited at a loss to free up cash for another investment with a better near-term outlook. The detailed transactions history for this JNPR position and the corresponding results are as follows:
01/24/2012 Bought 300 JNPR @ $22.89
01/24/2012 Sold 3 JNPR Feb2012 $23.00 Calls @ $1.15
01/30/2012 Bought-to-Close 3 JNPR Feb2012 $23.00 Calls @ $.20
01/30/2012 Sold 300 JNPR @ $21.15

The performance results(including commissions) for these Juniper Networks Inc.(JNPR) transactions was as follows:
Stock Purchase Cost: $6,875.95
= ($22.89*300+$8.95 commission)

Net Profit:
(a) Options Income: +$262.60
= (300*($1.15 - $.20)-2*$11.20 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation: -$530.95
= ($21.15-$22.89)*300 - $8.95 commissions

Total Net Profit: -$268.35
= (+$262.60 +$0.00 -$530.95)

Absolute Return: -3.9%
= -$268.35/$6,875.95

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