Sunday, March 23, 2014

March 2014 Expiration Results

The Covered Calls Advisor Portfolio (CCAP) contained three positions with March 2014 expirations. A summary of the results is as follows:

- Two of the three positions (Citigroup Inc. and Noble Corporation) were closed out at expiration. This was the optimal result for these positions in that the maximum potential return-on-investment (ROI) results from when the March positions were established were actually achieved. The annualized ROIs for these two closed positions are:
Citigroup Inc. = +1.9% absolute return (equivalent to +26.8% annualized return for the 26 ay holding period)
Noble Corp. = -8.4% absolute return (equivalent to -22.3% annualized return for the 137 day holding period)
The detailed transactions history and results for each of the two closed positions is detailed below. The cash available from the closing of these positions will be retained in the Covered Calls Advisor Portfolio until new covered calls and/or 100% cash-secured puts positions are established (most likely in the next week or two). These transactions will be posted on this blog the same day they occur.

- One of the three positions ended at expiration with long stock positions (Agnico Eagle Mines Ltd.).  The six Agnico Eagle Mines covered calls had its options expire since the stock price closed Friday at $32.36, below the Mar2014 options' $35.00 strike price. So, the Covered Calls Advisor Portfolio (CCAP) continues to own 600 long shares in Agnico Eagle.  A decision will be made early this week to either sell these shares or to continue with covered calls positions by selling Apr2014 call options against the current long stock holdings. 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 transaction details.

Details of the transactions and associated return-on-investment results for the two closed positions are as follows:

1. Citigroup Inc. (C) -- Closed
The transactions were as follows:
02/25/2013 Sold 6 Mar2014 $48.00 Puts @ $.94
Note: The price of Citigroup was $48.46 when this transaction was executed.
03/21/2014 The 6 put options expired
Note: the price of Citigroup was $50.08 upon Mar2014 options expiration.

The Covered Calls Advisor does not use margin, so the detailed information on this position reflects the fact that this position was established using 100% cash securitization for the six Put options sold.

The overall performance result (including commissions) for this Citigroup Inc. transaction was as follows:
100% Cash-Secured Cost Basis: $28,800.00 = $48.00*600

Net Profit:
(a) Options Income: +$550.55
= ($.94*600 shares) - $13.45 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (Citi was above $48.00 strike price at Mar2014 expiration): +$0.00
= ($48.00-$48.00)*600 shares

Total Net Profit (C closed above $48.00 strike price at Mar2014 options expiration):+$550.55 
= (+$550.55 +$0.00 +$0.00)

Absolute Return: +1.9%
= +$550.55/$28,800.00
Annualized Return: +26.8%
= (+$550.55/$28,800.00)*(365/26 days)

2.  Noble Corporation (NE): Closed
The transactions were as follows:
11/04/2013 Sold 3 Dec2013 $37.00 Noble Corp 100% Cash-Secured Put Options @ $1.24
Note: the price of NE was $37.32 when these options were sold
12/20/2013 Purchased 300 NE shares assigned at $37.00 strike price
Note: the price of NE was $36.32 at Dec2013 options expiration
12/31/2013 Sold 3 Jan2014 $37.00 Noble Corp Call Options @ $.80
Note: the price of NE was $36.97 when these options were sold
1/17/2014 Jan2014 $37.00 Noble Corp call options expired
Note: price of NE was $35.39 when these options expired
2/25/2014 Sold 3 Mar2014 $31.00 Noble Corp call options @ $1.00
Note: price of NE was $31.33 when these options were sold
03/21/2014 Sold 300 NE at $31.00 Mar2014 strike price
Note: the price of NE was $31.62 at Mar2014 options expiration.
The overall performance result (to-date including commissions) for these Noble Corp covered calls was as follows:
Stock Purchase Cost: $11,108.95
= ($37.00*300+$8.95 commission)

Net Profit:
(a) Options Income: +$878.40
= 300*($1.24+$.80+$1.00) - 3*$11.20 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (if assigned at $31.00) = -$1,808.95
= ($31.00-$37.00)*300 - $8.95 commissions

Total Net Profit (if assigned at Mar2014 expiration): -$930.55
= (+$878.40 +$0.00 -$1,808.95)

Absolute Return (if assigned): -8.4%
= -$930.55/$11,108.95
Annualized Return (if assigned at $31.00 at Mar2014 expiration): -22.3%
= (-$930.55/$11,108.95)*(365/137 days)