April 16, 2011 was options expiration Friday for April 2011. The short options in Apple Inc.(AAPL), Best Buy Corp.(BBY), and Microsoft Corp.(MSFT) were below the strike price at expiration and thus expired worthless. Today the Covered Calls Advisor decided to retain the shares in AAPL, BBY, and MSFT and to establish May2011 covered calls positions. The detailed transactions history for these positions as well as possible results for these investments are as follows:
1. Apple Inc.(AAPL) -- Continuation
The transactions history is as follows:
12/20/2010 Bought 100 AAPL @ $321.10
12/21/2010 Sold 1 AAPL Jan2011 $330.00 Call @ $6.10
Note: The call option was sold today when the AAPL stock was trading at $324.10.
01/22/2011 Jan2011 AAPL options expired
Note: The price of AAPL was $326.72 at closing on expiration Friday.
01/24/2011 Sold 1 AAPL Feb2011 $340.00 Call @ $5.50
Note: The price of AAPL was $333.72 when this Call option was sold.
02/19/2011 Feb2011 AAPL options expired
02/28/2011 Sold 1 AAPL Apr2011 $360.00 Call @ $10.80
Note: The price of AAPL was $354.32 when this Call option was sold.
04/16/2011 Apr2011 AAPL options expired.
04/26/2011 Sold 1 AAPL May2011 $350.00 Call @ $8.95
Note: The price of AAPL was $353.06 when this call option was sold.
A possible overall performance result(including commissions) for the Apple Inc.(AAPL) transactions would be as follows:
Stock Purchase Cost: $32,118.95
= ($321.10*100+$8.95 commission)
Net Profit:
(a) Options Income: +$3,096.20
= [100*($6.10+$5.50+$10.80+$8.95) - 4*$9.70 commissions]
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If assigned at $350.00): +$2,881.05
= ($350.00-$321.10)*100 - $8.95 commissions
Total Net Profit(If stock assigned at $350.00): +$5,977.25
= (+$3,096.20 +$0.00 +$2,881.05)
Absolute Return if Assigned at $350.00: +18.6%
= +$5,977.25/$32,118.95
Annualized Return If Assigned (ARIA): +44.7%
= (+$5,977.25/$32,118.95)*(365/152 days)
2. Best Buy Corp.(BBY) -- Continuation
The transactions history is as follows:
01/24/2011 Bought 300 BBY @ $35.13
01/24/2011 Sell-to-Open(STO) 3 BBY Feb2011 $36.00 Calls @ $.57
02/19/2011 Feb 2011 Options Expired
03/21/2011 Sell-to-Open(STO) 3 BBY Apr2011 $34.00 Calls @ $.49
Note: the price of BBY was $31.92 today when the options were sold.
04/16/2011 Apr2011 BBY options expired.
04/26/2011 Sold 3 BBY May2011 $31.00 Calls @ $.60
Note: The price of BBY was $30.59 when these call options were sold.
Two possible overall performance results(including commissions) for the Best Buy Corp.(BBY) transactions would be as follows:
Stock Purchase Cost: $10,547.95
= ($35.13*300+$8.95 commission)
Net Profit:
(a) Options Income: +$464.40
= (300*($.57+$.49+$.60) - 3*$11.20 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock price unchanged at $30.59):
-$1,370.95 = ($30.59-$35.13)*300 - $8.95 commissions
(c) Capital Appreciation (If assigned at $31.00): -$1,247.95
= ($31.00-$35.13)*300 - $8.95 commissions
Total Net Profit(If stock price unchanged at $30.59): -$906.55
= (+$464.40 +$0.00 -$1,370.95)
Total Net Profit(If stock assigned at $31.00): -$783.55
= (+$464.40 +$0.00 -$1,247.95)
1. Absolute Return if Unchanged at $30.59: -8.6%
= -$906.55/$10,547.95
Annualized Return If Unchanged (ARIU): -26.8%
= (-$906.55/$10,547.95)*(365/117 days)
2. Absolute Return if Assigned at $31.00: -7.4%
= -$783.55/$10,547.95
Annualized Return If Assigned (ARIA): -23.2%
= (-$783.55/$10,547.95)*(365/117 days)
3. Microsoft Corp.(MSFT) -- Continuation
The detailed transactions history for this position as well as possible results for this investment are as follows:
The transactions history is as follows:
01/24/2011 Bought 700 MSFT @ $28.15
01/24/2011 Sell-to-Open(STO) 7 MSFT Feb2011 $29.00 CallS @ $.40
02/19/2011 Feb 2011 Options Expired
03/21/2011 Sell-to-Open(STO) 7 MSFT Apr2011 $26.00 Calls @ $.31
Note: the price of MSFT was $25.47 today when the options were sold.
04/16/2011 Apr2011 MSFT options expired.
04/26/2011 Sold 7 MSFT May2011 $26.00 Calls @ $.66
Note: The price of MSFT was $26.06 when these call options were sold.
A possible overall performance result(including commissions) for the Microsoft Corp.(MSFT) transactions would be as follows:
Stock Purchase Cost: $19,713.95
= ($28.15*700+$8.95 commission)
Net Profit:
(a) Options Income: +$916.40
= 700*($.40+$.31+$.66) - 3*$14.20 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If assigned at $26.00): -$1,513.95
= ($26.00-$28.15)*700 - $8.95 commissions
Total Net Profit(If stock assigned at $26.00): -$597.55
= (+$916.40 +$0.00 -$1,513.95)
Absolute Return if Assigned at $26.00: -3.0%
= -$597.55/$19,713.95
Annualized Return If Assigned (ARIA): -9.5%
= (-$597.55/$19,713.95)*(365/117 days)
Tuesday, April 26, 2011
Wednesday, April 20, 2011
Establish iShares MSCI China ETF and UnitedHealth Group Inc. Covered Calls
Monday, with the Dow down over 200 points in reaction to the S&P warning on the U.S. debt rating, the Covered Calls Advisor purchased four equity positions with the idea of legging them into covered calls positions over the next couple of days when the market bounced back from its initial overreaction to the S&P news. The four equities purchased were 1,000 iShares MSCI China ETF (FXI), 500 iShares MSCI Emerging Markets ETF (EEM), 600 iShares MSCI South Korea ETF (EWY), and 300 shares of UnitedHealth Group Inc.(UNH). Yesterday, covered calls positions were established with the EEM and EWY holdings.
Today, with equity prices continuing to rebound from Monday's sell-off, covered calls positions were established against the other two shares held in FXI and UNH. The transactions as well as some potential results are detailed below.
1. iShares MSCI China ETF (FXI)
The transactions were as follows:
04/18/2011 Bought 1,000 FXI @ $44.80
04/20/2011 Sold 10 FXI May2011 $47.00 Calls @ $.49
Note: the price of FXI was $45.88 when the calls were sold.
Two possible overall performance results(including commissions) for these iShares MSCI China ETF (FXI) transactions would be as follows:
Stock Purchase Cost: $44,808.95
= ($44.80*1,000+$16.45 commission)
Net Profit:
(a) Options Income: +$477.30
= (1,000*$.49 - $12.70 commissions)
(b) Dividend Income: $0.00
(c) Capital Appreciation (If stock unchanged at $44.80 at expiration): -$8.95
= ($44.80-$44.80)*1,000 - $8.95 commissions
(c) Capital Appreciation (If stock assigned at $47.00): +$2,191.05
= ($47.00-$44.80)*1,000 - $8.95 commissions
Total Net Profit (If stock price unchanged at expiration): +$468.35
= (+$477.30 +$0.00 -$8.95)
Total Net Profit (If stock assigned at $47.00): +$2,668.35
= (+$477.30 +$0.00 +$2,191.05)
1. Absolute Return (If stock unchanged at $44.80 at expiration): +1.0%
= +$468.35/$44,808.95
Annualized Return (If stock unchanged at expiration): +11.6%
= (+$468.35/$44,808.95)*(365/33 days)
2. Absolute Return (If stock assigned at $47.00 at expiration): +6.0%
= +$2,668.35/$44,808.95
Annualized Return If Assigned (ARIA): +65.9%
= (+$2,668.35/$44,808.95)*(365/33 days)
2. UnitedHealth Group Inc.(UNH)
The transactions were as follows:
04/18/2011 Bought 300 UNH @ $43.97
04/20/2011 Sell-to-Open(STO) 3 UNH May2011 $45.00 CallS @ $1.03
Note: the price of UNH was $44.60 when the call options were sold.
Two possible overall performance results(including commissions) for these UnitedHealth Group Inc.(UNH) transactions would be as follows:
Stock Purchase Cost: $13,199.95
= ($43.97*300+$8.95 commission)
Net Profit:
(a) Options Income: +$297.80
= (300*$1.03 - $11.20 commissions)
(b) Dividend Income: $0.00
(c) Capital Appreciation (If stock unchanged at $43.97 at expiration): -$8.95
= ($43.97-$43.97)*300 - $8.95 commissions
(c) Capital Appreciation (If stock assigned at $45.00): +$300.05
= ($45.00-$43.97)*300 - $8.95 commissions
Total Net Profit (If stock price unchanged at $43.97 at expiration): +$288.85
= (+$297.80 +$0.00 -$8.95)
Total Net Profit (If stock assigned at $45.00): +$597.85
= (+$297.80 +$0.00 +$300.05)
1. Absolute Return (If stock unchanged at $43.97 at expiration): +2.2%
= +$288.85/$13,199.95
Annualized Return (If stock unchanged at expiration): +24.2%
= (+$288.85/$13,199.95)*(365/33 days)
2. Absolute Return (If stock assigned at $45.00 at expiration): +4.5%
= +$597.85/$13,199.95
Annualized Return If Assigned (ARIA): +50.1%
= (+$597.85/$13,199.95)*(365/33 days)
Today, with equity prices continuing to rebound from Monday's sell-off, covered calls positions were established against the other two shares held in FXI and UNH. The transactions as well as some potential results are detailed below.
1. iShares MSCI China ETF (FXI)
The transactions were as follows:
04/18/2011 Bought 1,000 FXI @ $44.80
04/20/2011 Sold 10 FXI May2011 $47.00 Calls @ $.49
Note: the price of FXI was $45.88 when the calls were sold.
Two possible overall performance results(including commissions) for these iShares MSCI China ETF (FXI) transactions would be as follows:
Stock Purchase Cost: $44,808.95
= ($44.80*1,000+$16.45 commission)
Net Profit:
(a) Options Income: +$477.30
= (1,000*$.49 - $12.70 commissions)
(b) Dividend Income: $0.00
(c) Capital Appreciation (If stock unchanged at $44.80 at expiration): -$8.95
= ($44.80-$44.80)*1,000 - $8.95 commissions
(c) Capital Appreciation (If stock assigned at $47.00): +$2,191.05
= ($47.00-$44.80)*1,000 - $8.95 commissions
Total Net Profit (If stock price unchanged at expiration): +$468.35
= (+$477.30 +$0.00 -$8.95)
Total Net Profit (If stock assigned at $47.00): +$2,668.35
= (+$477.30 +$0.00 +$2,191.05)
1. Absolute Return (If stock unchanged at $44.80 at expiration): +1.0%
= +$468.35/$44,808.95
Annualized Return (If stock unchanged at expiration): +11.6%
= (+$468.35/$44,808.95)*(365/33 days)
2. Absolute Return (If stock assigned at $47.00 at expiration): +6.0%
= +$2,668.35/$44,808.95
Annualized Return If Assigned (ARIA): +65.9%
= (+$2,668.35/$44,808.95)*(365/33 days)
2. UnitedHealth Group Inc.(UNH)
The transactions were as follows:
04/18/2011 Bought 300 UNH @ $43.97
04/20/2011 Sell-to-Open(STO) 3 UNH May2011 $45.00 CallS @ $1.03
Note: the price of UNH was $44.60 when the call options were sold.
Two possible overall performance results(including commissions) for these UnitedHealth Group Inc.(UNH) transactions would be as follows:
Stock Purchase Cost: $13,199.95
= ($43.97*300+$8.95 commission)
Net Profit:
(a) Options Income: +$297.80
= (300*$1.03 - $11.20 commissions)
(b) Dividend Income: $0.00
(c) Capital Appreciation (If stock unchanged at $43.97 at expiration): -$8.95
= ($43.97-$43.97)*300 - $8.95 commissions
(c) Capital Appreciation (If stock assigned at $45.00): +$300.05
= ($45.00-$43.97)*300 - $8.95 commissions
Total Net Profit (If stock price unchanged at $43.97 at expiration): +$288.85
= (+$297.80 +$0.00 -$8.95)
Total Net Profit (If stock assigned at $45.00): +$597.85
= (+$297.80 +$0.00 +$300.05)
1. Absolute Return (If stock unchanged at $43.97 at expiration): +2.2%
= +$288.85/$13,199.95
Annualized Return (If stock unchanged at expiration): +24.2%
= (+$288.85/$13,199.95)*(365/33 days)
2. Absolute Return (If stock assigned at $45.00 at expiration): +4.5%
= +$597.85/$13,199.95
Annualized Return If Assigned (ARIA): +50.1%
= (+$597.85/$13,199.95)*(365/33 days)
Petrobras ADR (PBR) -- Continuation Transaction
Last Friday was options expiration Friday for April 2011. The short options in Petrobras ADR (PBR) Apr2011 covered calls position with a $40.00 strike price expired worthless since PBR closed last Friday at $37.81, below the $40.00 strike price. Today the Covered Calls Advisor decided to retain the 300 shares in PBR and to establish a covered calls position by selling 3 May2011 $38.00 calls. The detailed transactions history for this position as well as possible results for this investment are as follows:
1. Petrobras ADR (PBR) -- Continuation Transaction
The transactions history to date for Petrobras ADR (PBR) is as follows:
06/21/2010 Bought 300 PBR @ $39.34
06/21/2010 Sold 3 PBR Jul2010 $40.00 Calls @ $1.05
7/17/2010 Jul2010 Options Expired
Note: The closing price of PBR was $34.51 on expiration Friday.
07/22/2010 Sold 3 PBR Aug2010 $38.00 Calls @ $.55
Note: The price of PBR was $36.52 today when these options were sold.
08/02/2010 +$57.90 Ex-Dividend = ($.193 Net Dividend x 300 shares)
08/21/2010 Aug2010 Options Expired
Note: The closing price of PBR was $34.42 on expiration Friday.
09/01/2010 Sold 3 PBR Sept2010 $36.00 Call Options @ $.58
Note: The price of PBR was $35.20 today when these call options were sold.
09/17/2010 Sep2010 Options Expired
09/20/2010 Sell-to-Open (STO) 3 PBR Oct2010 $37.00 Call Options @ $.63
Note: The price of PBR was $35.24 today when these options were sold.
10/16/2010 Oct2010 Options Expired
Note: Price of PBR at expiration was $34.29
10/18/2010 Sell-to-Open (STO) 3 PBR Nov2010 $36.00 Call Options @ $.62
Note: The price of PBR was $34.20 today when these call options were sold.
11/03/2010 +$57.90 Ex-Dividend = ($.193 Net Dividend x 300 shares)
11/20/2010 Nov2010 Options Expired
Note: Price of PBR at expiration was $33.59
12/01/2010 Sell-to-Open (STO) 3 PBR Dec2010 $34.00 Call Options @ $.54
Note: The price of PBR was $33.05 today when these call options were sold.
12/07/2010 $41.42 Dividend = ($.138 Net Dividend x 300 shares)
12/18/2010 Dec2010 Options Expired
Note: The price of PBR was $34.08 upon Dec2010 options expiration.
12/21/2010 Sold 3 PBR Jan2011 $35.00 Calls @ $.59
Note: The price of PBR was $34.18 when these options were sold.
01/06/2011 $61.03 Dividend = ($.203 Net Dividend x 300 shares)
01/21/2011 Buy-to-Close (BTC) 3 PBR Jan2011 $35.00 Call Options @ $1.35
01/21/2011 Sell-to-Open (STO) 3 PBR Feb2011 $37.00 Call Options @ $.89
02/18/2011 Buy-to-Close (BTC) 3 PBR Feb2011 $37.00 Call Options @ $.85
02/18/2011 Sell-to-Open (STO) 3 PBR Mar2011 $37.00 Call Options @ $1.67
03/18/2011 Buy-to-Close (BTC) 3 PBR Mar2011 $37.00 Call Options @ $2.19
03/18/2011 Sell-to-Open (STO) 3 PBR Apr2011 $40.00 Call Options @ $1.01
Note: The price of PBR was $39.23 when these options were sold.
04/16/2011 Apr2011 PBR Options Expired.
Note: the price of PBR was $37.81 upon options expiration.
04/20/2011 Sold 3 PBR May2011 $38.00 Calls @ $.87
Note: the price of PBR was $37.51 when these call options were sold.
Two possible overall performance results (including commissions) for the Petrobras (PBR) transactions would be as follows:
Stock Purchase Cost: $11,810.95
= ($39.34*300+$8.95 commission)
Net Profit:
(a) Options Income: +$1,248.60
= (300*($1.05+$.55+$.58+$.63+$.62+$.54+$.590-$1.35+$.89-$.85+$1.67-$2.19+$1.01+$.87) - 12*$11.20 commissions)
(b) Dividend Income: +$186.60 (2*$.193 + $.236)*300 shares -- Three ex-Dividend dates
(c) Capital Appreciation (If PBR price unchanged at $37.51): -$557.95
= ($37.51-$39.34)*300 - $8.95 commissions
(c) Capital Appreciation (If PBR assigned at $38.00): -$410.95
= ($38.00-$39.34)*300 - $8.95 commissions
Total Net Profit(If PBR unchanged at $37.51): +$877.25
= (+$1,248.60 +$186.60 -$557.95)
Total Net Profit(If PBR assigned at $38.00): +$1,024.25
= (+$1,248.60 +$186.60 -$410.95)
Absolute Return (If Unchanged at $37.51): +7.4%
= +$877.25/$11,810.95
Annualized Return If Unchanged (ARIU): +8.1%
= (+$877.25/$11,810.95)*(365/334 days)
Absolute Return (If Assigned at $38.00): +8.7%
= +$1,024.25/$11,810.95)
Annualized Return If Assigned(ARIA): +9.5%
= (+$1,024.25/$11,810.95)*(365/334 days)
This covered calls history demonstrates that as a result of receiving monthly options income, covered calls can achieve a net profit even when the underlying equity declines somewhat from the original purchase price.
1. Petrobras ADR (PBR) -- Continuation Transaction
The transactions history to date for Petrobras ADR (PBR) is as follows:
06/21/2010 Bought 300 PBR @ $39.34
06/21/2010 Sold 3 PBR Jul2010 $40.00 Calls @ $1.05
7/17/2010 Jul2010 Options Expired
Note: The closing price of PBR was $34.51 on expiration Friday.
07/22/2010 Sold 3 PBR Aug2010 $38.00 Calls @ $.55
Note: The price of PBR was $36.52 today when these options were sold.
08/02/2010 +$57.90 Ex-Dividend = ($.193 Net Dividend x 300 shares)
08/21/2010 Aug2010 Options Expired
Note: The closing price of PBR was $34.42 on expiration Friday.
09/01/2010 Sold 3 PBR Sept2010 $36.00 Call Options @ $.58
Note: The price of PBR was $35.20 today when these call options were sold.
09/17/2010 Sep2010 Options Expired
09/20/2010 Sell-to-Open (STO) 3 PBR Oct2010 $37.00 Call Options @ $.63
Note: The price of PBR was $35.24 today when these options were sold.
10/16/2010 Oct2010 Options Expired
Note: Price of PBR at expiration was $34.29
10/18/2010 Sell-to-Open (STO) 3 PBR Nov2010 $36.00 Call Options @ $.62
Note: The price of PBR was $34.20 today when these call options were sold.
11/03/2010 +$57.90 Ex-Dividend = ($.193 Net Dividend x 300 shares)
11/20/2010 Nov2010 Options Expired
Note: Price of PBR at expiration was $33.59
12/01/2010 Sell-to-Open (STO) 3 PBR Dec2010 $34.00 Call Options @ $.54
Note: The price of PBR was $33.05 today when these call options were sold.
12/07/2010 $41.42 Dividend = ($.138 Net Dividend x 300 shares)
12/18/2010 Dec2010 Options Expired
Note: The price of PBR was $34.08 upon Dec2010 options expiration.
12/21/2010 Sold 3 PBR Jan2011 $35.00 Calls @ $.59
Note: The price of PBR was $34.18 when these options were sold.
01/06/2011 $61.03 Dividend = ($.203 Net Dividend x 300 shares)
01/21/2011 Buy-to-Close (BTC) 3 PBR Jan2011 $35.00 Call Options @ $1.35
01/21/2011 Sell-to-Open (STO) 3 PBR Feb2011 $37.00 Call Options @ $.89
02/18/2011 Buy-to-Close (BTC) 3 PBR Feb2011 $37.00 Call Options @ $.85
02/18/2011 Sell-to-Open (STO) 3 PBR Mar2011 $37.00 Call Options @ $1.67
03/18/2011 Buy-to-Close (BTC) 3 PBR Mar2011 $37.00 Call Options @ $2.19
03/18/2011 Sell-to-Open (STO) 3 PBR Apr2011 $40.00 Call Options @ $1.01
Note: The price of PBR was $39.23 when these options were sold.
04/16/2011 Apr2011 PBR Options Expired.
Note: the price of PBR was $37.81 upon options expiration.
04/20/2011 Sold 3 PBR May2011 $38.00 Calls @ $.87
Note: the price of PBR was $37.51 when these call options were sold.
Two possible overall performance results (including commissions) for the Petrobras (PBR) transactions would be as follows:
Stock Purchase Cost: $11,810.95
= ($39.34*300+$8.95 commission)
Net Profit:
(a) Options Income: +$1,248.60
= (300*($1.05+$.55+$.58+$.63+$.62+$.54+$.590-$1.35+$.89-$.85+$1.67-$2.19+$1.01+$.87) - 12*$11.20 commissions)
(b) Dividend Income: +$186.60 (2*$.193 + $.236)*300 shares -- Three ex-Dividend dates
(c) Capital Appreciation (If PBR price unchanged at $37.51): -$557.95
= ($37.51-$39.34)*300 - $8.95 commissions
(c) Capital Appreciation (If PBR assigned at $38.00): -$410.95
= ($38.00-$39.34)*300 - $8.95 commissions
Total Net Profit(If PBR unchanged at $37.51): +$877.25
= (+$1,248.60 +$186.60 -$557.95)
Total Net Profit(If PBR assigned at $38.00): +$1,024.25
= (+$1,248.60 +$186.60 -$410.95)
Absolute Return (If Unchanged at $37.51): +7.4%
= +$877.25/$11,810.95
Annualized Return If Unchanged (ARIU): +8.1%
= (+$877.25/$11,810.95)*(365/334 days)
Absolute Return (If Assigned at $38.00): +8.7%
= +$1,024.25/$11,810.95)
Annualized Return If Assigned(ARIA): +9.5%
= (+$1,024.25/$11,810.95)*(365/334 days)
This covered calls history demonstrates that as a result of receiving monthly options income, covered calls can achieve a net profit even when the underlying equity declines somewhat from the original purchase price.
Freeport-McMoRan Copper and Gold Inc.(FCX) -- Continuation Transaction
Last Friday was options expiration Friday for April 2011. The short options in the Freeport-McMoRan Copper and Gold Inc.(FCX) Apr2011 covered calls position with a $55.00 strike price expired worthless since FCX closed last Friday at $51.17, below the $55.00 strike price. Today the Covered Calls Advisor decided to retain the 600 shares in FCX and to establish a covered calls position by selling 6 May2011 $55.00 calls. FCX reported their first quarter earnings this morning and as expected by this advisor, they beat analysts' earnings estimates by a wide margin ($1.59 versus $1.26). In addition to the regular quarterly dividend of $.250 per share, the company also announced a supplementary dividend of $.50 for shareholders of record on May 15th, which is prior to the May2011 options expiration date; so this dividend is included in the potential returns shown below. The call options were sold soon after the market opened this morning when the stock price spiked up to $54.73. The detailed transactions history for this position as well as two possible results for this investment are as follows:
1. Freeport-McMoRan Copper and Gold Inc.(FCX) -- Continuation Transaction
The transactions history to date for Freeport-McMoRan Copper and Gold Inc.(FCX) is as follows:
01/28/2011 Sold 3 Freeport-McMoRan Copper and Gold Inc.(FCX) Feb2011 $110.00 Puts @ $6.35
Note: the price of FCX stock was $106.10 when these puts were sold.
The 100% cash-secured put position in Freeport McMoRan (FCX) ended out-of-the-money and was assigned for purchase. The stock underwent a 2-for-1 split since original sale of the three FCX puts at $110.00 strike price. So the assignment was for the purchase of 600 shares of FCX stock at half of the the original $110 strike price value which is $55.00.
03/17/2011 Sold 6 FCX Apr2011 $55.00 Calls @ $1.43
Note: The price of FCX was $52.15 when these call options were sold.
04/16/2011 Apr2011 FCX Options Expired.
Note: the price of FCX was $51.17 upon options expiration.
04/20/2011 Sold 6 FCX May2011 $55.00 Calls @ $1.95
Note: the price of FCX was $54.73 when these call options were sold.
05/11/2011 $150.00 Ex-Dividend ($.250 per share * 600 shares)
05/15/2011 Supplementary Dividend ($.50 per share) for shares of record on 5/15/2011.
05/21/2011 May2011 Options Expiration Date
Two possible overall performance results(including commissions) for the Freeport-McMoRan Copper and Gold Inc.(FCX) transactions would be as follows:
Stock Purchase Cost: $33,008.95
= ($110.00*300+$8.95 commission)
Net Profit:
(a) Options Income: +$3,738.00
= [300*$6.35 + 600*($1.43+$1.95) - 3*$11.20 - 2*6*$13.45 commissions]
(b) Dividend Income: +$450.00 [($.50 + $.25) * 600 shares]
(c) Capital Appreciation (If stock price unchanged at $54.73):
-$170.95 = ($54.73-$55.00)*600 - $8.95 commissions
(c) Capital Appreciation (If assigned at $55.00): -$8.95
= ($55.00-$55.00)*600 - $8.95 commissions
Total Net Profit(If stock price unchanged at $54.73): +$4,017.05
= (+$3,738.00 +$450.00 -$170.95)
Total Net Profit(If stock assigned at $55.00): +$4,179.05
= (+$3,738.00 +$450.00 -$8.95)
Absolute Return if Unchanged at $54.73: +12.2%
= +$4,017.05/$33,008.95
Annualized Return If Unchanged (ARIU): +39.3%
= (+$4,017.05/$33,008.95)*(365/113 days)
Absolute Return if Assigned at $55.00: +12.7%
= +$4,179.05/$33,008.95
Annualized Return If Assigned (ARIA): +40.9%
= (+$4,179.05/$33,008.95)*(365/113 days)
1. Freeport-McMoRan Copper and Gold Inc.(FCX) -- Continuation Transaction
The transactions history to date for Freeport-McMoRan Copper and Gold Inc.(FCX) is as follows:
01/28/2011 Sold 3 Freeport-McMoRan Copper and Gold Inc.(FCX) Feb2011 $110.00 Puts @ $6.35
Note: the price of FCX stock was $106.10 when these puts were sold.
The 100% cash-secured put position in Freeport McMoRan (FCX) ended out-of-the-money and was assigned for purchase. The stock underwent a 2-for-1 split since original sale of the three FCX puts at $110.00 strike price. So the assignment was for the purchase of 600 shares of FCX stock at half of the the original $110 strike price value which is $55.00.
03/17/2011 Sold 6 FCX Apr2011 $55.00 Calls @ $1.43
Note: The price of FCX was $52.15 when these call options were sold.
04/16/2011 Apr2011 FCX Options Expired.
Note: the price of FCX was $51.17 upon options expiration.
04/20/2011 Sold 6 FCX May2011 $55.00 Calls @ $1.95
Note: the price of FCX was $54.73 when these call options were sold.
05/11/2011 $150.00 Ex-Dividend ($.250 per share * 600 shares)
05/15/2011 Supplementary Dividend ($.50 per share) for shares of record on 5/15/2011.
05/21/2011 May2011 Options Expiration Date
Two possible overall performance results(including commissions) for the Freeport-McMoRan Copper and Gold Inc.(FCX) transactions would be as follows:
Stock Purchase Cost: $33,008.95
= ($110.00*300+$8.95 commission)
Net Profit:
(a) Options Income: +$3,738.00
= [300*$6.35 + 600*($1.43+$1.95) - 3*$11.20 - 2*6*$13.45 commissions]
(b) Dividend Income: +$450.00 [($.50 + $.25) * 600 shares]
(c) Capital Appreciation (If stock price unchanged at $54.73):
-$170.95 = ($54.73-$55.00)*600 - $8.95 commissions
(c) Capital Appreciation (If assigned at $55.00): -$8.95
= ($55.00-$55.00)*600 - $8.95 commissions
Total Net Profit(If stock price unchanged at $54.73): +$4,017.05
= (+$3,738.00 +$450.00 -$170.95)
Total Net Profit(If stock assigned at $55.00): +$4,179.05
= (+$3,738.00 +$450.00 -$8.95)
Absolute Return if Unchanged at $54.73: +12.2%
= +$4,017.05/$33,008.95
Annualized Return If Unchanged (ARIU): +39.3%
= (+$4,017.05/$33,008.95)*(365/113 days)
Absolute Return if Assigned at $55.00: +12.7%
= +$4,179.05/$33,008.95
Annualized Return If Assigned (ARIA): +40.9%
= (+$4,179.05/$33,008.95)*(365/113 days)
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