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Monday, October 22, 2012

Established 100% Cash-Secured Puts -- MetLife Inc.

Today, the Covered Calls Advisor established new 100% Cash-Secured Puts position in MetLife Inc. at the $36.00 strike price and with an Nov2012 expiration. The Covered Calls Advisor does not use margin, so the detailed information on this position and a potential financial result shown below reflect the fact that this position was established using 100% cash securitization.

MetLife Inc. (ticker symbol MET) -- New Position
The transaction was as follows:
10/22/2012 Sold 7 MetLife Inc. (MET) Nov2012 $36.00 Put Options @ $1.51
Note: the price of MetLife stock was $35.94 today when these Puts were sold.

A possible overall performance result (including commissions) for this MetLife Inc.(MET) transaction would be as follows:
100% Cash-Secured Cost Basis: $25,200.00
= $36.00*700

Net Profit:
(a) Options Income: +$1,042.80
= ($1.51*700 shares) - $14.20 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If MetLife stock above $36.00 at Nov2012 expiration): +$0.00
= ($36.00-$36.00) -$0.00 commissions

Total Net Profit (If stock price above $36.00 at Nov2012 options expiration): +$1,042.80
= (+$1,042.80 +$0.00 +$0.00)

Absolute Return (If stock price above $36.00 at Nov2012 options expiration and Put options thus expire worthless): +4.1%
= +$1,042.80/$25,200.00
Annualized Return (If stock price above $36.00 at expiration): +55.9%
= (+$1,042.80/$25,200.00)*(365/27 days)

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