Search This Blog

Wednesday, July 25, 2018

Established Covered Calls in Blackstone Group L.P.

Today, a new Covered Calls position was established in Blackstone Group L.P. (ticker BX) for the August 17th, 2018 options expiration and at the $36.00 strike price when the stock was at $35.91.  Based on the Covered Calls Advisor's current Slightly Bearish sentiment, the closest at-the-money position was established.

As detailed below, a potential return-on-investment is +3.0% absolute return in 24 days (equivalent to a +45.9% annualized return-on-investment) if Blackstone stock closes above the $36.00 strike price on the Aug 17th options expiration date.

Blackstone Group L.P. (BX) -- New Covered Calls Position
The implied volatility of the Call options was 25.2 when this position was established.  There is an ex-dividend this Friday (7/27) of $.58 which is included in the return-on-investment calculations below.

The transactions were as follows:
07/25/2018 Bought 500 shares of Blackstone Group stock @ $35.91 per share 
07/25/2018 Sold 5 BX August 17th, 2018 $36.00 Call options @ $.41 per share
07/27/2018 BX has $.58 per share ex-dividend

A possible overall performance result (including commissions) would be as follows:
Covered Calls Cost Basis: $17,758.30
= ($35.91 - $.41)* 500 shares + $8.30 commissions

Net Profit Components:
(a) Options Income: +$205.00
= ($.41* 500 shares)
(b) Dividend Income: +$290.00
= $.58 ex-div per share  x 500 shares 
(c) Capital Appreciation (If BX stock is above $36.00 strike price at Aug 17th expiration): +$40.05
= ($36.00 -$35.91)* 500 shares - $4.95 commission

Total Net Profit: +$535.05
= (+$205.00 options income +$290.00 dividend income +$40.05 capital appreciation)

Absolute Return: +3.0%
= +$535.05/$17,758.30
Equivalent Annualized Return: +45.8%
= (+$535.95/$17,758.30)*(365/24 days)

No comments:

Post a Comment