Friday, May 31, 2013

Established 100% Cash-Secured Puts -- Prudential Financial Inc.


Today, the Covered Calls Advisor established a new 100% Cash-Secured Puts position in Prudential Financial Inc.  (Ticker Symbol PRU) with a Jun2013 expiration.

The transaction was as follows:
05/31/2013 Sold 3 Prudential Financial Inc. (PRU) Jun2013 $67.50 Put Options @ $1.12
Note: the price of PRU was $69.02 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 PRU transaction would be as follows:
100% Cash-Secured Cost Basis: $20,250.00 = $67.50*300

Net Profit:
(a) Options Income: +$324.80
= ($1.12*300 shares) - $11.20 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If PRU remains above $67.50 at Jun2013 expiration): +$0.00
= ($67.50-$67.50)*300 shares

Total Net Profit (If PRU is above $67.50 strike price at Jun2013 options expiration): +$324.80  = (+$324.80 +$0.00 +$0.00)

Absolute Return (If PRU above $67.50 at Jun2013 options expiration and Put options thus expire worthless): +1.6%
= +$324.80/$20,250.00
Annualized Return (If stock price above $67.50 at expiration): +26.6%
= (+$324.80/$20,250.00)*(365/22 days)