Upon Apr2013 options expiration, the 100% cash-secured puts position in Citigroup Inc. (Ticker Symbol C) expired with the stock closing at $48.22 which was below the $49.00 strike price. So, 700 shares of Citigroup were assigned to the Covered Calls Advisor Portfolio. Today, a covered calls position was established at the $49.00 strike price by selling 7 May2014 $49.00 call options. As detailed below, this investment will provide an overall +3.0% absolute return in 54 days (which is equivalent to a +20.3% annualized return) if the stock closes at or above the $49.00 strike price at options expiration on May 16th.
The details of the associated transactions and a potential return-on-investment result are as follows:
1. Citigroup Inc. (C)
The transactions are as follows:
3/24/2014 Sold 7 Apr2014 $49.00 Puts @ $.89
Note: The price of Citi was $50.03 when this transaction was executed.
4/19/2014 Seven Citigroup Put options expired
Note: The price of Citi was $48.22 upon Apr2014 options expiration
4/22/2014 Sold 7 Citigroup May2014 $49.00 call options at $.62 to establish a covered calls position
Note: The price of Citi was $48.28 when these Call options were sold
Two possible overall performance results (including commissions) would be as follows: