Search This Blog

Wednesday, September 27, 2017

Continuation of Covered Calls Position in Range Resources Corp.

Upon the August 18th, 2017 options expiration, the Covered Calls position in Range Resources Corp. (ticker symbol RRC) expired with the stock price below the $21.00 strike price.  So, the August Call options expired and the 500 shares of Range Resources stock were retained in the Covered Calls Advisor Portfolio.  Today, with RRC stock at $20.03, a sell-to-open order was executed to sell 5 October 20th, 2017 Call options at the $21.00 strike price for $.45 per share to continue the Range Resources Covered Calls position.

The history of this Range Resources position so far as well as a potential return-on-investment result is detailed below:


Range Resources Corp. (RRC) -- Continuation Covered Calls Position
The transactions were as follows:
07/26/2017  Bought 500 Range Resources Corp. shares @ $21.65
07/26/2017 Sold 5 RRC Aug 18, 2017 $21.00 Call options @ $1.25
Note: this was a simultaneous buy/write transaction.
08/18/2017 5 RRC Aug 18, 2017 Call options expired
Note: price of RRC was $17.92 upon options expiration
09/27/2017 Sold 5 RRC October 20th, 2017 $21.00 Call options @ $.45 per share
Note: the price of RRC stock was $20.03 today when the Oct 20th Call options were sold

A possible overall performance result (including commissions) would be as follows:
Cost Basis of 500 shares of RRC: $10,204.95
= ($21.65 - $1.25)*500 shares + $4.95 commission

Net Profit:
(a) Options Income: +$838.35
= ($1.25 + $.45) *500 shares - $11.65 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If RRC is above $21.00 strike price at Oct 20th expiration): -$329.95
= ($21.00-$21.65)*500 shares - $4.95 commissions

Total Net Profit (If RRC is above $21.00 strike price at Oct 20th, 2017 options expiration): +$508.40
= (+$838.35 options income +$0.00 dividends -$329.95 capital appreciation)

Absolute Return: +5.0%
= +$508.40/$10,204.95
Annualized Return: +21.1%
= (+$508.40/$10,204.95)*(365/86 days)

No comments:

Post a Comment