Wednesday, April 30, 2014

Established Covered Calls Position -- Noble Corporation

Today, a new covered calls position was established in Noble Corp  (Ticker Symbol NE).  This NE position was established at the $30.00 strike price and with a May2014 options expiration.

The details of the associated transactions and a potential return-on-investment result are as follows:

1. Noble Corp. (NE)
The transactions were as follows:
04/30/2013 Bought 700 NE shares @ $30.464
04/30/2013 Sold 7 NE May2014 $30.00 Call Options @ $.74
Note: the price of NE was $30.464 today when these options were sold.
05/01/2014 Ex-dividend of $.375 per share

A possible overall performance result (including commissions) for these Noble Corp covered calls is as follows:
Stock Purchase Cost: $21,333.75
= ($30.464*700+$8.95 commission)

Net Profit:
(a) Options Income: +$503.80
= 700*$.74 - $14.20 commissions
(b) Dividend Income: +$262.50 = $.375 per share * 700 shares
(c) Capital Appreciation (If NE assigned at $30.00) = -$333.75
= ($30.00-$30.464)*700 - $8.95 commissions

Total Net Profit (If NE assigned at $30.00): +$432.55
= (+$503.80 +$262.50 -$333.75)

Absolute Return if Assigned (at $30.00): +2.0%
= +$432.55/$21,333.75
Annualized Return If Assigned (ARIA): +41.1%
= (+$432.55/$21,333.75)*(365/18 days)

Monday, April 28, 2014

Established 100% Cash-Secured Puts -- Fusion-io Inc.






Today, the Covered Calls Advisor established a 100% Cash-Secured Puts position in Fusion-io Inc. (Ticker Symbol FIO) with a May2014 expiration and at the $9.00 strike price.  As detailed below, this investment will provide a +2.0% absolute return in 20 days (which is equivalent to a +36.7% annualized return) if Fusion-io stock price is unchanged at the same price of $8.40 on the May 16th options expiration date.  The maximum potential return for this investment is if the stock closes above $9.00 at options expiration.  In this case, the absolute return would be +8.7% (which is equivalent ot a +158.4% annualized return) for this 20 day investment.

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

Details of this transaction along with some potential return-on-investment results are: 

1.  Fusion-io Inc.
The transaction was as follows:
04/28/2014 Sold 7 Fusion-io Inc. (FIO) May2014 $9.00 Put Options @ $.80
Note: the price of FIO was $8.40 when these Puts were sold.

Two possible overall performance results(including commissions) for this FIO transaction would be as follows:
100% Cash-Secured Cost Basis: $6,300.00
= $9.00*700

Net Profit:
(a) Options Income: +$546.80
= ($.80*700 shares) - $13.20 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If FIO remains unchanged at $8.40 price upon May2014 expiration): -$420.00
= ($8.40-$9.00)*700 shares
(c) Capital Appreciation (If FIO closes above $9.00 strike price upon May2014 expiration):
+$0.00 = ($9.00-$9.00)*700 shares

Total Net Profit (If FIO remains unchanged at $8.40 price upon May2014 expiration): +$126.80  = (+$546.80 +$0.00 -$420.00)
Total Net Profit (If FIO is above $9.00 strike price at May2014 options expiration): +$546.80 = (+$546.80 +$0.00 +$0.00)

1. Absolute Return (If FIO remains unchanged at $8.40 price at May2014 options expiration and Put options thus expire worthless): +2.0%
= +$126.80/$6,300.00
Annualized Return (If stock price unchanged at $8.40 at expiration): +36.7%
= (+$126.80/$6,300.00)*(365/20 days); OR

2. Absolute Return (If FIO stock price is above $9.00 upon May2014 expiration and Put options thus expire worthless): +8.7%
= +$546.80/$6,300.00
Annualized Return (If stock price above $9.00 at expiration): +158.4%
= (+$546.80/$6,300.00)*(365/20 days)

Tuesday, April 22, 2014

Continuation -- Citigroup Inc. Covered Calls

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:
100% Cash-Secured Cost Basis: $34,300.00
= $49.00*700

Net Profit:
(a) Options Income: +$1,028.60
= ($.89 + $.62)*700 shares - 2*$14.20 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If C remains unchanged at current price of $48.28 upon May2014 expiration): -$504.00
= ($48.28-$49.00)*700 shares; OR
(c) Capital Appreciation (If C closes above the $49.00 strike price at May2014 options expiration): $0.00
= ($49.00-$49.00)*700 shares

Total Net Profit (If Citi remains unchanged at current $48.28 price upon May2014 expiration): +$524.60 
= (+$1,028.60 +$0.00 -$504.00)
Total Net Profit (If Citi is above $49.00 strike price at May2014 options expiration): +$1,028.60 
= (+$1,028.60 +$0.00 +$0.00)

1.  If Citi remains unchanged at current $48.28 stock price upon May2014 options expiration:
Absolute Return: +1.5%
= +$524.60/$34,300.00
Equivalent Annualized Return: +10.3%
= (+$524.60/$34,300.00)*(365/54 days)

2. If Citi closes above $49.00 strike price upon May2014 options expiration:
Absolute Return: +3.0%
= +$1,028.60/$34,300.00
Equivalent Annualized Return: +20.3%
= (+$1,028.60/$34,300.00)*(365/54 days)

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)