Tuesday, October 23, 2012

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

Today, the Covered Calls Advisor established a new 100% Cash-Secured Puts position in Citigroup Inc. at the $36.00 strike price and with a 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.

Citigroup, Inc . (ticker symbol C) -- New Position
The transaction was as follows:
10/23/2012 Sold 4 Citigroup, Inc. (symbol C) Nov2012 $36.00 Put Options @ $.82
Note: the price of Citi stock was $36.97 today when these Puts were sold.

A possible overall performance result (including commissions) for this Citigroup, Inc.(C) transaction would be as follows:
100% Cash-Secured Cost Basis: $14,400.00
= $36.00*400

Net Profit:
(a) Options Income: +$316.05
= ($.82*400 shares) - $11.95 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If Citigroup stock above $36.00 at Nov2012 expiration): +$0.00
= ($31.00-$31.00) -$0.00 commissions

Total Net Profit (If stock price above $36.00 at Nov2012 options expiration): +$316.05
= (+$316.05 options income +$0.00 dividends +$0.00 capital appreciation)

Absolute Return (If stock price above $36.00 at Nov2012 options expiration and Put options thus expire worthless): +2.2%
= +$316.05/$14,400.00
Annualized Return (If stock price above $36.00 at expiration): +32.0%
= (+$316.05/$14,400.00)*(365/25 days)