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Monday, July 30, 2012

Established iShares MSCI China ETF Covered Calls

Today, a new covered calls position was established in iShares MSCI China ETF (Symbol FXI) with an Aug2012 expiration and at the $34.00 strike price. The transactions are as follows:

07/30/2012 Bought 1,000 FXI shares @ $34.09
07/30/2012 Sold 10 FXI Aug2012 $34.00 Call Options @ $.80

A possible overall performance result(including commissions) for this iShares MSCI China ETF (FXI) covered calls position is as follows:
Stock Purchase Cost: $34,098.95
= ($34.09*1,000+$8.95 commission)

Net Profit:
(a) Options Income: +$783.55 = ($.80*1,000 shares) - $16.45 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If FXI assigned at $34.00 upon expiration): -$98.95
=+($34.00-$34.09)*1,000 - $8.95 commissions

Total Net Profit(If FXI assigned at $34.00 at Aug2012 expiration): +$684.60
= (+$783.55 +$0.00 -$98.95)

Absolute Return (If FXI assigned at $34.00 at Aug2012 expiration): +2.0%
= +$684.60/$34,098.95
Annualized Return (If stock assigned): +40.7%
= (+$684.60/$34,098.95)*(365/18 days)

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