Monday, August 27, 2012

August 24th Weekly Expiration Results

Last Friday was the options expiration date for weekly options.  The Covered Calls Advisor normally trades monthly options, but established two positions in the Weeklys that expired this past Friday as follows:
- The covered calls position in iShares MSCI China ETF expired out-of-the-money.  A decision will be made today to either sell these shares or to re-establish a covered calls position in FXI by selling call options. A post will be made on this blog later today when this decision occurs and the transaction is made.  For now, the Covered Calls Advisor Portfolio (CCAP) is long 1,000 shares of FXI.
- The 100% cash-secured Puts position in UnitedHealth Group Inc. expired with the stock price closing above the strike price, so the short Put options expired worthless.  The annualized return-on-investment result for this position was +31.5%.

1. iShares MSCI China ETF (FXI)
The transactions history for this iShares MSCI China ETF (FXI) covered calls position is as follows:
07/30/2012 Bought 1,000 FXI shares @ $34.09
07/30/2012 Sold 10 FXI Aug2012 $34.00 Call Options @ $.80
08/17/2012 Bought-to-Close 10 FXI Aug2012 $34.00 Calls at $.42
08/17/2012 Sold-to-Open 10 FXI August 24th, 2012 $34.50 call options at $.31
Note: the price of FXI was $34.41 today when this roll-up-and-out transaction occurred.
08/24/2012 10 FXI Aug 24th $34.50 call options expired.
Note: the price of FXI was $34.01 today when these options expired.

2. UnitedHealth Group Inc. (UNH)
The transactions history is as follows:
08/17/2012 Sold 3 UnitedHealth Group Inc.(UNH) Aug 24th, 2012 $52.50 Put Options @ $.40
Note: the price of UNH was $52.89 today when these Puts were sold.
08/24/2012 3 UNH Put options expired.
Note: the price of UNH was $54.16 when these Put options expired.

The overall performance result (including commissions) for this UnitedHealth Group Inc. transaction was as follows:
100% Cash-Secured Cost Basis: $15,750.00
= $52.50*300

Net Profit:
(a) Options Income: +$108.80
= ($.40*300 shares) - $11.20 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (UNH above $52.50 at Aug 24th expiration): +$0.00
= ($52.50-$52.50)*300

Total Net Profit (UNH above $52.50 at Aug 24th options expiration): +$108.80 = (+$108.80 +$0.00 +$0.00)

Absolute Return (UNH above $52.50 at Aug 24th options expiration and Put options thus expire worthless): +0.69%
= +$108.80/$15,750.00
Annualized Return (Stock price above $52.50 at expiration): +31.5%
= (+$108.80/$15,750.00)*(365/8 days)