Search This Blog

Monday, December 29, 2014

Established Continuing Covered Calls Position in iShares MSCI Germany ETF

On Friday, three Jan2015 $28.00 call options were sold against the 300 long iShares MSCI Germany ETF shares (ticker symbol EWG).

The transactions to date for this position and a potential return-on-investment result are detailed below:

iShares MSCI Germany ETF (EWG) -- Continuation
The transactions are as follows:
12/02/2014 Sold 3 iShares MSCI Germany ETF Dec2014 $29.00 Puts @ $.70
Note: The price of EWG was $28.57 when this transaction was executed.
12/26/2014 Sold 3 EWG Jan2015 Call options @ $.60

Note: the price of EWG was $28.24 when these options were sold.

A possible overall performance result (including commissions) for this transaction would be as follows:
100% Cash-Secured Cost Basis: $8,700.00
= $29.00*300
Note:  the price of EWG was $28.57 when these Put options were sold.

Net Profit:
(a) Options Income: +$367.60
= ($.70+$.60)*300 shares - 2*$11.20 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If EWG is above $28.00 strike price at Jan2015 expiration): -$308.95
= ($28.00-$29.00)*300 shares - $8.95 commissions

Total Net Profit (If EWG is above $28.00 strike price at Jan2015 options expiration):+$58.65 
= (+$367.60 +$0.00 -$308.95)

Absolute Return (If EWG is above $28.00 strike price at Jan2015 options expiration): +0.7%
= +$58.65/$8,700.00
Annualized Return (If EWG above $28.00 at expiration): +5.5%
= (+$58.65/$8,700.00)*(365/45 days)