Friday, February 1, 2013

Closed -- Fusion-io Inc.

Unexpectedly, the 3 short Feb2013 $20.00 Puts were assigned overnight.  FIO exceeded its quarterly sales and profit estimates, but because of a delay in receiving orders from its two largest vendors (Apple and Facebook), it expects revenues to be substantially lower during the next two quarters than previously planned.  So the stock tanked on the day of this announcement.  This morning, with the stock trading higher than yesterday's close, a decision was made to sell the 300 shares of FIO and close out the position with a relatively small absolute loss of 1.5%.

The transactions were as follows:
01/29/2013 Sold 3 Fusion-io Inc. (FIO) Feb2013 $20.00 Put Options @ $2.00
Note: the price of FIO was $19.54 today when these Puts were sold.
2/01/2013 3 Feb2013 FIO Puts assigned at $20.00 and thus 300 FIO shares purchased 02/01/2013 Sold 300 FIO shares at $17.74 to close out the position  

The overall performance result (including commissions) for this Fusion-io Inc. (FIO) cash-secured Puts position was as follows:
Stock Purchase Cost: $6,008.95
= ($20.00*300+$8.95 commission)

Net Profit:
(a) Options Income: +$588.80
= $2.00  X 300 shares - $11.20 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation: -$680.95
=+($17.76-$20.00)*300 - $8.95 commissions

Total Net Profit: -$92.15
= (+$588.80 +$0.00 -$680.95)

Absolute Return: -1.5%
= -$92.15/$6,008.95