Search This Blog

Monday, May 14, 2018

Continuation of Covered Calls Positions in Sinclair Broadcast Group Inc. and U.S. Steel Corp.

At the April 20th, 2018 options expiration, Covered Calls positions in Sinclair Broadcast Group Inc. (ticker symbol SBGI) and United States Steel Corp. (ticker X) expired with the stock prices below their strike prices.  So, the Call options expired and their stock shares were retained in the Covered Calls Advisor's Portfolio.  The Covered Calls Advisor continued both Covered Calls positions by selling Call options against both long stock positions, the Sinclair May 18th $30s and the U.S. Steel $40s for June 15th. 

Details as well as some potential overall return-on-investment results for each position are:

1. Sinclair Broadcast Group Inc. (SBGI) -- Continuation of Covered Calls Position
The transactions were as follows:
03/07/2018 Bought 400 shares of Sinclair stock @ $33.40 per share 
03/07/2018 Sold 4 Sinclair March 16th, 2018 $33.00 Call options @ $1.00 per share
Note: this was a simultaneous Buy/Write transaction
03/08/2018 Ex-dividend of $72.00 ($.18 per share x 400 shares)
03/15/2018 4 March 16th Call options expired
03/27/2018 Sold 4 Sinclair April 20th, 2018 $32.00 Call options @ $1.45 per share
04/20/2018 4 Sinclair April 20th Call options expired
05/09/2018 Sold 4 Sinclair May 18th, 2018 $30.00 Call options @ $.52 per share

A possible overall performance result (including commissions) would be as follows:
Covered Calls Cost Basis: $12,967.63
= ($33.40 - $1.00)* 400 shares + $7.63 commission

Net Profit Components:
(a) Options Income: +$1,188.00
= ($1.00 + $1.45 + $.52) * 400 shares
(b) Dividend Income: +$72.00
= $.18 per share * 400 shares 
(c) Capital Appreciation (If SBGI is above $30.00 strike price at May 18th expiration): -$1,364.95
= ($30.00 -$33.40)* 400 shares - $4.95 commission

Potential Total Net Profit (If assigned at expiration): -$104.95
= (+$1,188.00 options income +$72.00 dividend income -$1,364.95 capital appreciation)

Absolute Return: -0.8%
= -$104.95/$12,967.63
Equivalent Annualized Return: -4.0%
= (-$104.95/$12,967.63)*(365/73 days)



2.  United States Steel Corp. (X) -- Continuation of Covered Calls Position
The transactions were:
02/01/2018 Bought 400 shares of U.S. Steel stock @ $36.72 per share 
02/01/2018 Sold 4 U.S. Steel Mar 16th, 2018 $36.00 Call options @ $2.62 per share
Note: this was a simultaneous Buy/Write transaction
02/08/2018 $20.00 = ($.05 per share ex-dividend x 400 shares)
03/13/2018 Bought-to-Close 4 Mar 16th $36.00 Call options @ $5.99
03/13/2018 Sold-to-Open 4 Apr 20th $40.00 Call options @ $3.57
Note: this Calls debit spread transaction occurred when the stock was at $41.88
04/20/2018 4 U.S. Steel April 20th Call options expired
05/10/2018 Sold 4 U.S. Steel June 15th, 2018 $40.00 Call options @ $.66 per share
Note: the price of U.S. Steel stock was $36.04 when these Calls were sold

Two possible overall performance results (including commissions) would be as follows:
Covered Calls Cost Basis: $13,647.63
= ($36.72 - $2.62)* 400 shares + $7.63 commission

Net Profit Components:
(a) Options Income: +$335.97
= ($2.62 - $5.99 + $3.57 + $.66) * 400 shares - $8.03 commissions 
(b) Dividend Income: +$20.00
= $.05 per share * 400 shares 
(c) Capital Appreciation (If price of X stock is unchanged at $36.04 at June 15th expiration): -$276.95
= ($36.04 -$36.72)* 400 shares - $4.95 commission; OR
(c) Capital Appreciation (If X is above $40.00 strike price at June 15th expiration):
+$1,307.05
= ($40.00 -$36.72)* 400 shares - $4.95 commission

1. Potential Total Net Profit (If stock price unchanged at expiration): +$79.02
= (+$335.97 options income +$20.00 dividend income -$276.95 capital appreciation); OR
2. Potential Total Net Profit (If assigned at expiration): +$1,663.02
= (+$335.97 options income +$20.00 dividend income +$1,307.05 capital appreciation)

1. Absolute Return (If stock price unchanged at expiration): +0.6%
= +$79.02/$13,647.63
Equivalent Annualized Return: +1.6%
= (+$79.02/$13,647.63)*(365/134 days); OR
2. Absolute Return (If assigned at expiration): +12.2%
= +$1,663.02/$13,647.63
Equivalent Annualized Return: +33.2%
= (+$1,663.02/$13,647.63)*(365/134 days)

No comments:

Post a Comment