Monday, November 19, 2012

November 2012 Expiration Results

The Covered Calls Advisor Portfolio (CCAP) contained twelve covered calls positions with November 2012 expirations. A summary of the results is as follows:

- Ten positions (Canadian Natural Resources LTD, Citigroup Inc., Foot Locker Inc., Fusion-io Inc., SPDR Gold Shares, iShares MSCI China ETF, iShares MSCI Emerging Markets ETF, iShares MSCI South Korea ETF, MetLife Inc., and Potash Corp.) had their options expire yesterday since the stock prices closed below the Nov options' strike prices.  So now, the Covered Calls Advisor Portfolio (CCAP) is long shares in these ten equities.  A decision will be made during this week to either sell these shares or to re-establish covered calls positions by selling Dec2012 call options.  When these decisions are made and the accompanying transactions are completed, a post will be made on this blog on the same day with the details.

- The other two positions (Mylan Inc. and United Continental Holdings Inc.) were closed out upon Nov2012 options expiration since the stock closed above the strike prices.  Hence, the options expired and the accompanying equities were assigned at their respective strike prices.  
The cash available from the closing of these positions will be retained in the Covered Calls Advisor Portfolio until new covered calls positions with Dec2012 options expirations are established (possibly later this week).  These transactions will be posted on this blog the same day they occur.

The annualized return-on-investment financial results for these two closed positions are:
Mylan Inc. = +45.5%
United Continental Holdings Inc. = +37.1%

The detailed transactions history and results for these two closed positions are as follows:

1. Mylan Inc. (Ticker Symbol MYL) -- Closed
The transactions history was as follows:
10/24/2012 Bought 1,000 MYL shares @ $23.88
10/25/2012 Sold 10 MYL Nov2012 $24.00 Call Options @ $.65
Note: the price of MYL shares was $24.36 today when these options were sold.
11/16/2012 MYL Nov2012 options expired
Note: the price of MYL stock was $25.45 upon Nov2012 options expiration.

The overall performance result (including commissions) for this Mylan Inc. (MYL) covered calls position was as follows:
Stock Purchase Cost: $23,888.95 = ($23.88*1,000+$8.95 commission)

Net Profit:
(a) Options Income: +$633.55 = ($.65 X 1,000 shares) - $16.45 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (MYL assigned at $24.00 upon Nov2012 expiration): +$111.05
=+($24.00-$23.88)*1,000 - $8.95 commissions

Total Net Profit (MYL assigned at $24.00 at Nov2012 expiration): +$744.60
= (+$633.55 +$0.00 +$111.05)

Absolute Return (MYL assigned at $24.00 at Nov2012 expiration): +3.1%
= +$744.60/$23,888.95
Annualized Return (MYL stock assigned): +45.5%
= (+$744.60/$23,888.95)*(365/25 days)


2. United Continental Holdings Inc. (Ticker Symbol UAL) -- Closed
The transactions history was as follows:
10/25/2012 Sold 10 United Continental Holdings Inc.(UAL) Nov2012 $19.00 Put Options @ $.48
Note: the price of UAL was $19.85 today when these Puts were sold.
11/16/2012 UAL Nov2012 options expired
Note: the price of UAL stock was $19.50 upon Nov2012 options expiration.

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

The overall performance result(including commissions) for this UAL transaction was as follows:
100% Cash-Secured Cost Basis: $19,000.00 = $19.00*1,000

Net Profit:
(a) Options Income: +$463.55 = ($.48*1,000 shares) - $16.45 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (UAL above $19.00 strike price at Nov2012 expiration): +$0.00 = ($19.00-$19.00)*1,000  

Total Net Profit (UAL stock price was above $19.00 strike price at Nov2012 options expiration): +$463.55
= (+$463.55 +$0.00 +$0.00)  

Absolute Return (UAL stock above $19.00 at Nov2012 options expiration and Put options thus expire worthless): +2.4%
= +$463.55/$19,000.00
Annualized Return (UAL stock price above $19.00 at expiration): +37.1%
= (+$463.55/$19,000.00)*(365/24 days)

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