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Wednesday, November 26, 2014

General Electric Co. Position Closed

The Jan2015 covered calls position in the General Electric Company expired last Friday with the stock below the $24.00 strike price.  Today, the position was closed out by selling the 300 shares in the Covered Calls Advisor portfolio.  As detailed below, this investment yielded a +0.5% absolute return in 14 days (which is equivalent to a +45.4% annualized return-on-investment). The associated transactions and financial results are:

General Electric Company (GE) -- Closed

The transactions were as follows:
01/06/2015 Sold 4 General Electric Co Jan2015 $24.00 Puts @ $.34
Note: The price of GE was $24.00 when this transaction was executed.
01/20/2015 Sold 400 GE shares @ $23.84

The Covered Calls Advisor does not use margin, so the detailed information on this position and the results shown below reflect the fact that this position was established using 100% cash securitization for the four Put options sold.

The overall performance result (including commissions) for this transaction was as follows:
100% Cash-Secured Cost Basis: $9,600.00
= $24.00*400
Note:  the price of GE was $24.00 when these Put options were sold.

Net Profit:
(a) Options Income: +$124.05
= ($.34*400 shares) - $11.95 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation: -$72.95
= ($23.84-$24.00)*400 shares - $8.95 commission

Total Net Profit: +$51.10
= (+$124.05 +$0.00 -$72.95)

Absolute Return: +0.5%
= +$51.10/$9,600.00
Annualized Return: +13.9%
= (+$51.10/$9,600.00 )*(365/14 days)