Sunday, April 20, 2014

April 2014 Expiration Results

The Covered Calls Advisor Portfolio (CCAP) contained five positions with April 2014 expirations.  All five positions were established as short Put options.
The Covered Calls Advisor does not use margin, so the detailed information on these five positions reflects the fact that they were established using 100% cash securitization for all five positions.
The results for these five positions so far are as follows:

- Four of the five positions (Freeport McMoran Copper and Gold Inc., Hertz Global Holdings Inc., Intel Corp., and iShares MSCI South Korea ETF) were closed out at expiration. This was the optimal result for these positions in that the maximum potential return-on-investment (ROI) results were actually achieved from when the April short Put option positions were established.  The annualized ROIs for these four closed positions are:
Freeport McMoran Copper and Gold Inc. = +1.4% absolute return (equivalent to +18.8% annualized return for the 27 day holding period)
Hertz Global Holdings Inc. = +2.0% absolute return (equivalent to +27.5% annualized return for the 27 day holding period)
Intel Corporation = +2.0% absolute return (equivalent to +26.5% annualized return for the 27 day holding period)
iShares MSCI South Korea ETF = +1.2% absolute return (equivalent to +16.6% annualized return for the 27 day holding period)

The detailed transactions history and results for each of these four 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 five positions (Citigroup Inc.) ended at expiration with the price of the stock at $48.22 which was below the $49.00 strike price.  So the seven Citigroup Put options were exercised and 700 shares of Citigroup were purchased at $49.00.  A decision will be made early this week to either sell these shares or to establish a covered calls positions by selling May2014 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 to-date.

Details of the four closed transactions and their associated return-on-investment results are as follows:

1.  Freeport McMoran Copper and Gold Inc. (FCX) -- Closed
The transactions were as follows:
3/24/2014 Sold 6 Apr2014 $30.00 Puts @ $.44
Note: The price of FCX was $31.51 when this transaction was executed.
4/19/2014 Six FCX Put options expired
Note: The price of FCX was $33.01 upon April 2014 expiration

The performance result (including commissions) for this FCX position was as follows:
100% Cash-Secured Cost Basis: $18,000.00
= $30.00*600

Net Profit:
(a) Options Income: +$250.55
= ($.44*600 shares) - $13.45 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation: +$0.00
= ($30.00-$30.00)*600 shares

Total Net Profit (FCX closed above the $30 strike price for April 2014 options expiration): +$250.55  = (+$250.55 +$0.00 +$0.00)

Absolute Return: +1.4%
= +$250.55/$18,000.00
Annualized Return: +18.8%
= (+$250.55/$18,000.00)*(365/27 days)


2.   Hertz Global Holdings Inc. (HTZ) -- Closed 
The transactions were as follows:
3/24/2014 Sold 7 Apr2014 $26.00 Puts @ $.55
Note: The price of HTZ was $26.76 when this transaction was executed.
4/19/2014 Seven HTZ Put options expired
Note: The price of HTZ was $28.07 upon April options expiration

The performance result (including commissions) for this HTZ position was as follows:
100% Cash-Secured Cost Basis: $18,200.00
= $26.00*700

Net Profit:
(a) Options Income: +$370.80
= ($.55*700 shares) - $14.20 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation: +$0.00
= ($26.00-$26.00)*700 shares

Total Net Profit (HTZ closed above the $26.00 strike price at Apr2014 options expiration): +$370.80
= (+$370.80 +$0.00 +$0.00)

Absolute Return: +2.0%
= +$370.80/$18,200.00
Annualized Return: +27.5%
= (+$370.80/$18,200.00)*(365/27 days)


3.   Intel Corporation (INTC) -- Closed 
The transactions were as follows:
3/24/2014 Sold 7 Apr2014 $25.00 Puts @ $.51
Note: The price of Intel was $25.11 when this transaction was executed.
4/19/2014 Seven Intel April 2014 Put options expired
Note: The price of Intel was $27.04 upon April 2014 options expiration

The overall performance result (including commissions) for this INTC position was as follows:
100% Cash-Secured Cost Basis: $17,500.00
= $25.00*700

Net Profit:
(a) Options Income: +$342.80
= ($.51*700 shares) - $14.20 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation: +$0.00
= ($25.00-$25.00)*700 shares

Total Net Profit (Intel closed above $25.00 strike price at Apr2014 options expiration): +$342.80
= (+$342.80 +$0.00 +$0.00)

Absolute Return: +2.0%
= +$342.80/$17,000.00
Annualized Return: +26.5%
= (+$342.80/$17,000.00)*(365/27 days)
 

4.   iShares MSCI South Korea ETF (EWY) -- Closed
The transactions were as follows:
3/24/2014 Sold 4 Apr2014 $58.00 Puts @ $.74
Note: The price of EWY was $58.95 when this transaction was executed.
4/19/2014 Four EWY Apr2014 Put options expired
Note: The price of EWY was $63.69 upon Apr2014 options expiration

The overall performance result (including commissions) for this EWY position was as follows:
100% Cash-Secured Cost Basis: $23,200.00
= $58.00*400

Net Profit:
(a) Options Income: +$284.05
= ($.74*400 shares) - $11.95 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation: +$0.00
= ($58.00-$58.00)*400 shares

Total Net Profit (EWY closed above $58.00 strike price upon Apr2014 options expiration): +$284.05
= (+$284.05 +$0.00 +$0.00)

Absolute Return: +1.2%
= +$284.05/$23,200.00
Annualized Return: +16.6%
= (+$284.05/$23,200.00)*(365/27 days)