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Saturday, August 18, 2012

Sold 100% Cash-Secured Puts -- UnitedHealth Group Inc.

On Aug2012 options expiration Friday, the Covered Calls Advisor established a new 100% Cash-Secured Puts position in UnitedHealth Group Inc. (Ticker Symbol UNH) with an Aug 24th, 2012 expiration. This position is a weekly option and was established when the stock was about 1% out-of-the money relative to the Put's strike price.

The transaction was 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.

The Covered Calls Advisor does not use margin, so the detailed information on this position and some potential results shown below reflect the fact that this position was established using 100% cash securitization for the three Put options sold.

A possible overall performance results(including commissions) for this UnitedHealth Group Inc. transaction would be 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 (If UNH above $52.50 at Aug 24th expiration): +$0.00
= ($19.00-$19.00)*700

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

Absolute Return (If UNH above $52.50 at Aug 24th options expiration and Put options thus expire worthless): +0.69%
= +$108.80/$15,750.00
Annualized Return (If stock price above $21.00 at expiration): +31.5%
= (+$108.80/$15,750.00)*(365/8 days)

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