A new covered calls position was established today in the Covered Calls Advisor Portfolio(CCAP) with the purchase of Quanta Services Inc.(PWR) covered calls as follows:Established Quanta Services Inc.(PWR) Covered Calls for Feb2010:
12/21/09 Bought 300 PWR @ $20.80
12/21/09 Sold 3 PWR Feb2010 $22.50 Calls @ $.50
Some possible overall performance results(including commissions) for the PWR transactions would be as follows:
Stock Purchase Cost: $6,248.95
= ($20.80*300+$8.95 commission)
Net Profit:
(a) Options Income: +$138.80
= (300*$.50 - $11.20 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock price unchanged at $20.80):
-$8.95 = ($20.80-$20.80)*300 - $8.95 commissions
(c) Capital Appreciation (If exercised at $22.50): +$501.05
= ($22.50-$20.80)*300 - $8.95 commissions
Total Net Profit(If stock price unchanged at $20.80): +$129.85
= (+$138.80 +$0.00 -$8.95)
Total Net Profit(If stock price exercised at $22.50): +$639.85
= (+$138.80 +$0.00 +$501.05)
Absolute Return if Unchanged at $20.80: +2.1%
= +$129.85/$6,248.95
Annualized Return If Unchanged (ARIU) +12.1%
= (+$129.85/$6,248.95)*(365/61 days)
Absolute Return if Exercised at $45.00: +10.2%
= +$639.85/$6,248.95
Annualized Return If Exercised (ARIE) +61.3%
= (+$639.85/$6,248.95)*(365/61 days)
