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Friday, January 16, 2015

Halliburton Co. Covered Calls Position Closed

Today, the covered calls position in Halliburton Co.(ticker symbol HAL) at the $40 strike price and for today's expiration was unwound. The 3 short Call options were bought back and the 300 shares of HAL stock were simultaneously sold. As shown below, the absolute return was +6.6% which is equivalent to an annualized return-on-investment of +68.6% for the 35 days that this investment was held.  The details of the transactions and the financial results are detailed below:

Halliburton Co. (HAL) -- Position Closed
The transactions were as follows:
12/12/2014 Bought 300 HAL shares @ $37.59
12/12/2014 Sold 3 HAL Jan2015 $40.00 Call Options @ $1.30
Note: the price of HAL was $37.59 today when these options were sold.
01/16/2015 Bought-to-Close 3 HAL Jan2015 $40.00 Call Options @ $.03
01/16/2015 Sold 300 HAL shares @ $38.93

The overall performance result (including commissions) for these Halliburton covered calls was:
Stock Purchase Cost: $11,285.95
= ($37.59*300+$8.95 commission)

Net Profit:
(a) Options Income: +$358.60
= 300*($1.30-$.03) - 2*$11.20 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation = +$384.10
= ($38.93-$37.59)*300 - 2*$8.95 commissions

Total Net Profit: +$742.70
= (+$358.60 +$0.00 +$384.10)

Absolute Return: +6.6%
= +$742.70/$11,285.95
Annualized Return: +68.6%
= (+$742.70/$11,285.95)*(365/35 days)