Search This Blog

Monday, April 24, 2017

Continuation of JPMorgan Chase & Co. Position

Upon the April options expiration last Friday, four of the five positions were in-the-money and the positions were closed.  The one position that was out-of-the-money (strike price of $85.00 and stock closed Friday at $84.52) was JPMorgan Chase & Co.  So, the four Apr2017 Call options in JPMorgan Chase & Co.(ticker symbol JPM) expired assigned and 400 shares remained in the Covered Calls Advisor portfolio.  Today, the JPMorgan Chase continued this investment by establishing another covered calls position by selling four May2017 Call options against the 400 JPM shares held. The company also went ex-dividend on April 4th with a quarterly dividend of $.50 which is included in the transactions details below.

A potential return-on-investment is +4.5% absolute return (equivalent to +28.6% annualized) for the 57 days of this JPMorgan Chase & Co. investment. Details of the transactions to-date including the potential return-on-investment result are provided below:

JPMorgan Chase & Co. (JPM) -- Covered Calls Continuation
The transactions are as follows:
03/23/2017 Bought 400 JPM shares @ $87.21
03/23/2017 Sold 4 JPM Apr2017 $85.00 Call options @ $3.16
Note: a simultaneous buy/write transaction was executed.
04/04/2017 Quarterly ex-dividend of $.50 per share
04/21/2017 4 JPM Call options expired
04/24/2017 Sold 4 JPM May2017 $85.00 Call options @ $2.50
Note: the price of JPM was $86.53 when these Calls were sold

A possible overall performance result (including commissions) for this JPM covered calls position is as follows:
Stock Purchase Cost: $34,888.95
= ($87.21*400+$4.95 commission)

Net Profit:
(a) Options Income: +$2,248.90
= ($3.16 + $2.50)*400 shares - 2*$7.55 commissions

(b) Dividend Income: +$200.00
= ($.50 dividend per share x 400 shares)
(c) Capital Appreciation (If JPM assigned at $85.00 at May2017 expiration): -$888.95
+($85.00-$87.21)*400 - $4.95 commissions

Total Net Profit (If JPM assigned at $85.00 at May2017 expiration): +$1,559.95
= (+$2,248.90 +$200.00 -$888.95)

Absolute Return: (If option exercised at May2017 options expiration): +4.5%
= +$1,559.95/$34,888.95
Annualized Return: +28.6%
= (+$1,559.95/$34,888.95)*(365/57 days)