Wednesday, March 1, 2017

Dick's Sporting Goods Position Closed

This morning, the Covered Calls Advisor closed the five Mar2017 $48.00 100% cash-secured Put options position in Dick's Sporting Goods Inc. (ticker DKS).  Recent disappointing 4th quarter earnings reports from stalwart brick-and-mortar retailers such as Walmart and Target as well as Best Buy just this morning, have reinforced to me the ongoing disruptive nature of and consumers' growing acceptance of online shopping. So, brick-and-mortar retailer Dick's is likely not immune from this trend and their upcoming 4th quarter earnings report on March 7th seems increasingly likely to also be met with disappointment.  The details of this position are presented below.

Dick's Sporting Goods Inc. (DKS) --
The transaction was as follows:
02/14/2017  Sold 5 DKS 100% cash-secured $48.00 Put options with Mar2017 expirations @ $1.60
Note: the price of Dick's stock was $50.91 today when this transaction was executed.
03/01/2017 Bought-to-Close 5 DKS Mar2017 $48.00 Puts @ $1.55
Note: the price of Dick's stock was $50.22 today when this position was closed

A potential performance result (including commissions) could be as follows:
100% Cash-Secured Cost Basis: $24,000.00
= $48.00*500 shares

Net Income:
 (a) Options Income: +$18.00
= ($1.60 - $1.55) * 500 shares - 2* $3.50 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation: +$0.00
= ($48.00 -$48.00)*500 shares

Total Net Profit: +$18.00
= (+$18.00 options income +$0.00 dividend income +$0.00 capital appreciation)

Absolute Return: +0.1%
= +$18.00/$24,000.00
Annualized Return: +1.8%
= (+$18.00/$24,000.00)*(365/15 days)