The Covered Calls Advisor Portfolio (CCAP) contained seven positions with December 2014 expirations. The results are as follows:
- Four of the seven positions (Baidu Inc., two iShares MSCI China ETF positions, and Micron Technology Inc.) were closed out at expiration. This was the optimal result for these positions in that the maximum potential return-on-investment (ROI) results was achieved from when each of these positions was established. The annualized ROI for these closed positions are:
Baidu Inc. = +1.4% absolute return (equivalent to +25.8% annualized return for the 20 days holding period)
iShares MSCI China ETF (FXI position #1) = +3.2% absolute return (equivalent to +19.5% annualized return for the 60 days holding period)
iShares MSCI China ETF (FXI position #2) = +3.6% absolute return (equivalent to +64.8% annualized return for the 20 days holding period)
Micron Technology Inc. = +4.1% absolute return (equivalent to +28.8% annualized return for the 52 days holding period)
The detailed transactions history and results for each of these 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.
- Three of the seven positions (Agnico Eagle Mines, Goldcorp, and iShares MSCI Gemany ETF) ended at expiration with the price of the stocks below the strike prices. So the respective options expired and the long shares were retained in the Covered Calls Advisor Portfolio. A decision will be made soon to either sell these shares or to establish a covered calls position by selling Jan2015 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 along with the detailed transactions to-date for each stock position.
Details of the four closed positions summarized above and the associated return-on-investment results are as follows:
1. Baidu Inc. (BIDU) -- Closed
The transactions were as follows:
12/02/2014 Sold 1 out-of-the-money Dec2014 $230.00 Put @ $3.35
Note: The price of Baidu was $237.38 when this transaction was executed.
12/19/2014 BIDU Dec2014 $230.00 Put option expired.
Note: the price of BIDU was $234.23 upon Dec2014 options expiration.
The overall performance result (including commissions) for this Baidu transaction was as follows:
100% Cash-Secured Cost Basis: $23,000.00 = $230.00*100
Note: the price of BIDU was $237.38 when the Put option was sold.
Net Profit:
(a) Options Income: +$325.30
= ($3.35*100 shares) - $9.70 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (BIDU closed above $230.00 at the Dec2014 options expiration): +$0.00
= ($230.00-$230.00)*100 shares
Total Net Profit (BIDU was above $230.00 strike price at Dec2014 options expiration): +$325.30
= (+$325.30 +$0.00 +$0.00)
Absolute Return (BIDU Put option expired worthless since the stock was above the strike price at options expiration): +1.4%
= +$325.30/$23,000.00
Annualized Return: +25.8%
= (+$325.30/$23,000.00)*(365/20 days)
2. iShares MSCI China Large-Cap ETF (FXI) -- 1st Position Closed
The transactions were as follows:
10/22/2014 Sold 4 iShares MSCI China ETF Dec2014 $38.00 Puts @ $1.25
Note: The price of FXI was $38.48 when this transaction was executed.
12/19/2014 FXI Dec2014 $38.00 Put options expired.
Note: the price of FXI was $40.26 upon Dec2014 options expiration.
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 four Put options sold.
A possible overall performance result (including commissions) for this transaction was as follows:
100% Cash-Secured Cost Basis:
$15,200.00
= $38.00*400
Note: the price of FXI was $38.48 when these Put options were sold.
Net Profit:
(a) Options Income: +$488.05
= ($1.25*400 shares) - $11.95 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (FXI was above $38.00 at Dec2014 expiration): +$0.00
= ($38.00-$38.00)*400 shares
Total Net Profit (FXI closed above $38.00 strike price at Dec2014 options expiration): +$488.05
= (+$488.05 +$0.00 +$0.00)
Absolute Return-on-Investment: (FXI was above $38.00 at Dec2014 options expiration and Put options thus expired worthless): +3.2%
= +$488.05/$15,200.00
Annualized Return: +19.5%
= (+$488.05/$15,200.00)*(365/60 days)
3. iShares MSCI China Large-Cap ETF (FXI) -- 2nd Position Closed
The transaction was as follows:
12/01/2014 Sold 4 iShares China Large-Cap ETF Dec2014 $40.00 Puts @ $1.45
Note: The price of FXI was $39.44 when this transaction was executed.
12/19/2014 FXI Dec2014 $40.00 Put options expired.
Note: the price of FXI was $40.26 upon Dec2014 options expiration.
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 four Put options sold.
The overall performance result (including commissions) for this transaction was:
100% Cash-Secured Cost Basis:
$16,000.00
= $40.00*400
Note: the price of FXI was $39.44 when these Put options were sold.
Net Profit:
(a) Options Income: +$568.05
= ($1.45*400 shares) - $11.95 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (FXI was above $40.00 strike price at Dec2014 expiration): +$0.00
= ($40.00-$40.00)*400 shares
Total Net Profit (FXI was above $40.00 strike price at Dec2014 options expiration): +$568.05
= (+$568.05 +$0.00 +$0.00)
Absolute Return (FXI was above $40.00 strike price at Dec2014 options expiration, so the Put options expired worthless): +3.6%
= +$568.05/$16,000.00
Annualized Return: +64.8%
= (+$568.05/$16,000.00)*(365/20 days)
4. Micron Technology Inc. (MU) -- Closed
The transaction is as follows:
10/30/2014 Sold 4 Micron Technology Inc. Dec2014 $30.00 Puts @ $1.26
Note: The price of Micron was $31.22 when this transaction was executed.
12/19/2014 MU Dec2014 $30.00 Put option expired.
Note: the price of MU was $34.49 upon Dec2014 options expiration.
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 four Put options sold.
The overall performance result (including commissions) for this transaction was as follows:
100% Cash-Secured Cost Basis: $12,000.00
= $30.00*400
Note: the price of Micron was $31.22 when these Put options were sold.
Net Profit:
(a) Options Income: +$492.05
= ($1.26*400 shares) - $11.95 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (MU was above $30.00 at Dec2014 expiration): +$0.00
= ($30.00-$30.00)*400 shares
Total Net Profit (MU was above $30.00 strike price at Dec2014 options expiration): +$492.05
= (+$492.05 +$0.00 +$0.00)
Absolute Return-on-Investment:: +4.1%
= +$492.05/$12,000.00
Annualized Return: +28.8%
= (+$492.05/$12,000.00 )*(365/52 days)
