Thursday, February 9, 2012

Closed -- Fusion-io Inc.

The Feb2012 short 100% cash-secured puts position in Fusion-io Inc.(FIO) was established at the beginning of last week. Today, this position was exited at a small profit. There are two primary reasons for closing this position now. First, the largest company in the cloud storage space (EMC) announced this week a new product that will likely enable them to compete more directly and effectively against FIO's technology-leading open-architecture data storage structure. EMC's new product offering signals a significant threat to FIO's current technology advantage when considered in conjunction with EMC's existing large customer base. Second, the lock-up period on FIO's initial public offering expires on Feb 15th and this could trigger some selling pressure on the stock.

The detailed transactions history for this Fusion-io Inc.(FIO) position was as follows:
01/30/2012 Sold 3 Fusion-io Inc.(FIO) Feb2012 $25.00 Put Options @ $1.90
Note: the price of FIO was $24.36 today when these Puts were sold.
02/09/2012 Bought-to-Close 3 FIO Feb2012 $25.00 Puts @ $1.75
Note: the price of FIO was $24.15 today when these Puts were bought to close out the position.

The performance result(including commissions) for these Fusion-io Inc.(FIO) transactions was as follows:
100% Cash-Secured Cost Basis: $7,500.00
= $25.00*300

Net Profit:
(a) Options Income: +$22.60
= (300*($1.90 - $1.75)-2*$11.20 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation: +$0.00

Total Net Profit: +$22.60
= (+$22.60 +$0.00 +$0.00)

Absolute Return: +0.3%
= +$22.60/$7,500.00
Annualized Return: +11.0%
= (+$22.60/$7,500.00)*(365/10 days)