Tuesday, February 21, 2012

Continuation Transactions -- iShares MSCI Emerging Markets ETF and iShares MSCI South Korea ETF

Today, continuation transactions were completed to re-establish covered calls with Mar2012 expirations in two existing positions (iShares MSCI Emerging Markets ETF and iShares MSCI South Korea ETF). The detailed transactions history for these covered calls positions as well as possible performance results are as follows:

1. iShares MSCI Emerging Markets ETF (EEM) -- 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.
10/22/2011 Oct2011 options expired.
10/26/2011 Sold 5 EEM Nov2011 $41.00 Calls @ $.78
11/19/2011 Nov2011 EEM options expired.
11/30/2011 Sold 5 EEM Dec2011 $41.00 Calls @ $.59
Note: the price of EEM was $39.71 today when these call options were sold.
12/20/2011 Ex-Distribution $173.48 = $.34696 * 500 shares
01/20/2012 Bought-to-Close 5 EEM Jan2012 $39.00 Calls @ $2.43
Note: the price of EEM was $41.41 when these call options were bought.
01/20/2012 Sold 5 EEM Feb2012 $42.00 Calls @ $.80
Note: the price of EEM was $41.50 today when these call options were sold.
02/17/2012 Bought-to-Close 5 EEM Feb2012 $42.00 Calls @ $1.97
Note: the price of EEM was $43.95 when these call options were bought-to-close.
02/20/2012 Sold 5 EEM Feb2012 $43.00 Calls @ $1.83
Note: the price of EEM was $44.02 when these call options were sold.

A possible overall performance result(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: +$1,725.30
= [500*($.83 +$.35+$.62+$.99+$.71+$.63+$.78+$.59-$2.43+$.80-$1.97+$1.83) - 11*$12.70 commissions]
(b) Distribution Income: $403.94 = ($.46092+$.34696) * 500 shares
(c) Capital Appreciation (If stock assigned at $43.00): -$2,396.05
= ($43.00-$47.81)*500 - $8.95 commissions

Total Net Profit (If EEM assigned at $43.00): -$266.81
= (+$1,725.30 +$403.94 -$2,396.05)

Absolute Return (If EEM assigned at $43.00 at expiration): -1.1%
= -$266.81/$23,913.95
Annualized Return If Assigned (ARIA): -1.2%
= (-$266.81/$23,913.95)*(365/335 days)


2. iShares MSCI South Korea ETF (EWY) -- Continuation
The transactions history is as follows:
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
11/19/2011 Nov2011 EWY options expired.
11/30/2011 Sold 8 EWY Dec2011 $56.00 Calls @ $1.48
Note: the price of EWY was $55.38 today when these call options were sold.
12/20/2011 Ex-Distribution $298.41 = $.37301 * 800 shares
01/20/2012 Bought-to-Close 8 EWY Jan2012 $55.00 Calls @ $1.75
Note: the price of EWY was $56.73 when these call options were bought.
01/20/2012 Sold 8 EWY Feb2012 $57.00 Calls @ $1.50
Note: the price of EWY was $56.73 when these call options were sold.
02/17/2012 Bought-to-Close 8 EWY Feb2012 $57.00 Calls @ $2.48
Note: the price of EWY was $59.46 when these call options were bought-to-close.
02/20/2012 Sold 8 EWY Mar2012 $59.00 Calls @ $1.85
Note: the price of EWY was $59.32 when these call options were sold.

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

Net Profit:
(a) Options Income: +$2,477.25
= (800*($2.59+$1.48-$1.75+$1.50-$2.48+$1.85) - 5*$14.95 commissions)
(b) Dividend Income: +$298.41 = $.37301* 800 shares
(c) Capital Appreciation (If EWY assigned at $59.00): +$3,495.05
= ($59.00-$54.62)*800 - $8.95 commissions

Total Net Profit(If EWY assigned at $59.00): +$6,270.71
= (+$2,477.25 +$298.41 +$3,495.05)

Absolute Return if Assigned at $59.00: +14.3%
= +$6,270.71/$43,704.95
Annualized Return If Assigned (ARIA): +36.1%
= (+$6,270.71/$43,704.95)*(365/145 days)

1 comment:

  1. Regarding the EEM trade, seems like a lot of work for a -1% loss. I use long term weekly moving averages to time my trades. By my work, EEM was clearly in a long term downtrend by mid June. Why hold on to an underlying that is trending down? Just sell it and move on to something else that is trending higher or sideways.

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