The Covered Calls Advisor Portfolio (CCAP) contained a total of fourteen covered calls positions with August 2010 expirations, with the following results:
- One covered calls position in Domtar Corp.(UFS) was well in-the-money earlier this week and was rolled-up-and-out to a Sep2010 covered calls position. (See "link" to post describing this covered calls continuation trade).
- Two positions (iShares MSCI South Korea ETF and DSW Inc.) closed in-the-money. The calls were exercised and the shares of EWY and DSW were called away.
- The remaining eleven positions in the CCAP ended out-of-the-money. Decisions will be made to either sell the equities, or to keep them and sell calls to establish Sep2010 covered call positions. The related transactions will be made this week and the actual transactions will be posted on this blog site on the same day they occur.
Detailed results for the two covered calls positions that were assigned (called away) upon Aug2010 expiration are as follows:
1. iShares MSCI South Korea ETF (EWY) -- Closed
The transactions history to date for iShares MSCI South Korea ETF (EWY) is as follows:
06/21/2010 Bought 400 EWY @ $49.33
06/21/2010 Sold 4 EWY Jul2010 $50.00 Calls @ $.85
7/17/2010 Jul2010 Options Expired
Note: The closing price of EWY was $46.37 on expiration Friday.
07/22/2010 Sold 4 EWY Aug2010 $49.00 Calls @ $1.05
Note: The price of EWY was $47.99 today when these options were sold.
8/21/2010 400 shares of EWY were in-the-money and the shares were called away (assigned) at $49.00. Note: The closing price of EWY was $49.25 on expiration Friday.
The performance result(including commissions) for the EWY transactions was as follows:
Stock Purchase Cost: $19,740.95
= ($49.33*400+$8.95 commission)
Net Profit:
(a) Options Income: +$736.10
= (400*($.85+$1.05) - 2*$11.95 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (EWY assigned at $49.00): -$140.95
= ($49.00-$49.33)*400 - $8.95 commissions
Total Net Profit(EWY assigned at $49.00): +$595.15
= (+$736.10 +$0.00 -$140.95)
Absolute Return (EWY called away at $49.00): +3.0%
= +$595.15/$19,740.95
Annualized Return: +18.0%
= (+$587.10/$19,740.95)*(365/61 days)
2. DSW Inc.(DSW) -- Closed
The transactions history for DSW Inc.(DSW) is as follows:
06/22/2010 Bought 300 DSW @ $24.75
06/22/2010 Sold 3 DSW Jul2010 $25.00 Calls @ $1.100
7/17/2010 Jul2010 Options Expired
Note: The closing price of DSW was $23.21 on expiration Friday.
07/22/2010 Sold 3 DSW Aug2010 $25.00 Calls @ $1.05
Note: The price of DSW was $24.86 today when these options were sold.
8/21/2010 300 shares of DSW were in-the-money and the shares were called away (assigned) at $25.00. Note: The closing price of DSW was $25.74 on expiration Friday.
The performance result(including commissions) for the DSW transactions was as follows:
Stock Purchase Cost: $7,433.95
= ($24.75*300+$8.95 commission)
Net Profit:
(a) Options Income: +$622.60
= (300*($1.10+$1.05) - 2*$11.20 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (Stock called away at $25.00): +$66.05
= ($25.00-$24.75)*300 - $8.95 commissions
Total Net Profit(Stock assigned at $25.00): +$688.65
= (+$622.60 +$0.00 +$66.05)
Absolute Return (Stock assigned at $25.00): +9.3%
= +$688.65/$7,433.95
Annualized Return: +56.4%
= (+$688.65/$7,433.95)*(365/60 days)
Sunday, August 22, 2010
Tuesday, August 17, 2010
Overall Market Meter Rating Remains "Slightly Bullish"
Each month during expiration week, the Covered Calls Advisor re-calculates each of the current values for the nine factors used to determine the "Overall Market Meter" rating. As shown in the chart below, the new Overall Market Meter Average rating (blue bar at the bottom of the chart) remains unchanged at "Slightly Bullish":
The current Market Meter Average of 3.89 is equal to the 3.89 of last month and as such remains at Slightly Bullish (Note: the range for Slightly Bullish is from 3.5 to 4.5) for establishing covered calls investing positions for the upcoming options expiration month of September 2010.
As shown in the right sidebar, the covered calls investing strategy corresponding to this Slightly Bullish sentiment is to "on-average sell 2% out-of-the-money covered calls for the nearest expiration month." So with the August 2010 options expiration this week, new positions for Sep2010 expiration will be established in accordance with this guideline.
For a more detailed explanation of each of the Covered Calls Advisor's nine indicators, please refer to this prior blog post on that topic -- link.
Your comments or questions regarding this post are welcomed. Please click on the "comments" link below or email me at the address shown in the upper-right sidebar.
Regards and Godspeed,
Jeff
The current Market Meter Average of 3.89 is equal to the 3.89 of last month and as such remains at Slightly Bullish (Note: the range for Slightly Bullish is from 3.5 to 4.5) for establishing covered calls investing positions for the upcoming options expiration month of September 2010.
As shown in the right sidebar, the covered calls investing strategy corresponding to this Slightly Bullish sentiment is to "on-average sell 2% out-of-the-money covered calls for the nearest expiration month." So with the August 2010 options expiration this week, new positions for Sep2010 expiration will be established in accordance with this guideline.
For a more detailed explanation of each of the Covered Calls Advisor's nine indicators, please refer to this prior blog post on that topic -- link.
Your comments or questions regarding this post are welcomed. Please click on the "comments" link below or email me at the address shown in the upper-right sidebar.
Regards and Godspeed,
Jeff
Friday, August 13, 2010
Roll Up and Out -- Domtar Corp.
Today, with one week remaining until Aug2010 options expiration (and with the four Domtar Corp.(UFS) Aug2010 $55.00 calls well in-the-money), the Covered Calls Advisor decided to roll-up-and-out to the Sep2010 expiration at the $65.00 strike price. The transactions history as well as some possible results are detailed below:
1. Domtar Corp.(UFS) -- Continuation Transaction
Today, with Domtar Corp.(UFS) stock priced at $60.29 the existing Aug2010 $55.00 covered calls were bought back for $5.70. Later today, when the stock had risen to $61.38, the limit order to sell four Sep2010 $65.00 strike options at $1.85 was executed as follows:
08/13/2010 Buy-to-Close (BTC) 4 UFS Aug2010 $55.00 Call Options @ $5.70
08/12/2010 Sell-to-Open (STO) 4 UFS Sep2010 $65.00 Call Options @ $1.85
The transactions history to date for Domtar Corp.(UFS) is as follows:
06/23/2010 Bought 400 UFS @ $55.10
06/23/2010 Sold 4 UFS Jul2010 $60.00 Calls @ $1.10
07/17/2010 Jul2010 Options Expired
Note: The closing price of UFS was $47.77 on expiration Friday.
07/22/2010 Sold 4 UFS Aug2010 $55.00 Calls @ $1.20
Note: The price of UFS was $50.80 today when these options were sold.
08/13/2010 Buy-to-Close (BTC) 4 UFS Aug2010 $55.00 Call Options @ $5.70
08/12/2010 Sell-to-Open (STO) 4 UFS Sep2010 $65.00 Call Options @ $1.85
Note: The price of UFS was $61.38 today when these options were sold.
Two possible overall performance results(including commissions) for Domtar Corp.(UFS) transactions would be as follows:
Stock Purchase Cost: $22,048.95
= ($55.10*400+$8.95 commission)
Net Profit:
(a) Options Income: -$667.80
= (400*($1.10+$1.20-$5.70+$1.85) - 4*$11.95 commissions)
(b) Dividend Income: +$100.00 =($.25*400) with ex-dividend of 9/13/2010
(c) Capital Appreciation (If UFS unchanged at $61.38): +$2,503.05
= ($61.38-$55.10)*400 - $8.95 commissions
(c) Capital Appreciation (If UFS assigned at $65.00): +$3,951.05
= ($65.00-$55.10)*400 - $8.95 commissions
Total Net Profit(If UFS price unchanged at $61.38): +$1,935.25
= (-$667.80 +$100.00 +$2,503.05)
Total Net Profit(If UFS assigned at $65.00): +$3,383.25
= (-$667.80 +$100.00 +$3,951.05)
Absolute Return (If UFS unchanged at $61.38): +8.8%
= +$1,935.25/$22,048.95
Annualized Return If Unchanged (ARIU): +36.8%
= (+$1,935.25/$22,048.95)*(365/87 days)
Absolute Return if Exercised at $55.00: +15.3%
= +$3,383.25/$22,048.95
Annualized Return If Exercised (ARIE): +64.4%
= (+$3,383.25/$22,048.95)*(365/87 days)
1. Domtar Corp.(UFS) -- Continuation Transaction
Today, with Domtar Corp.(UFS) stock priced at $60.29 the existing Aug2010 $55.00 covered calls were bought back for $5.70. Later today, when the stock had risen to $61.38, the limit order to sell four Sep2010 $65.00 strike options at $1.85 was executed as follows:
08/13/2010 Buy-to-Close (BTC) 4 UFS Aug2010 $55.00 Call Options @ $5.70
08/12/2010 Sell-to-Open (STO) 4 UFS Sep2010 $65.00 Call Options @ $1.85
The transactions history to date for Domtar Corp.(UFS) is as follows:
06/23/2010 Bought 400 UFS @ $55.10
06/23/2010 Sold 4 UFS Jul2010 $60.00 Calls @ $1.10
07/17/2010 Jul2010 Options Expired
Note: The closing price of UFS was $47.77 on expiration Friday.
07/22/2010 Sold 4 UFS Aug2010 $55.00 Calls @ $1.20
Note: The price of UFS was $50.80 today when these options were sold.
08/13/2010 Buy-to-Close (BTC) 4 UFS Aug2010 $55.00 Call Options @ $5.70
08/12/2010 Sell-to-Open (STO) 4 UFS Sep2010 $65.00 Call Options @ $1.85
Note: The price of UFS was $61.38 today when these options were sold.
Two possible overall performance results(including commissions) for Domtar Corp.(UFS) transactions would be as follows:
Stock Purchase Cost: $22,048.95
= ($55.10*400+$8.95 commission)
Net Profit:
(a) Options Income: -$667.80
= (400*($1.10+$1.20-$5.70+$1.85) - 4*$11.95 commissions)
(b) Dividend Income: +$100.00 =($.25*400) with ex-dividend of 9/13/2010
(c) Capital Appreciation (If UFS unchanged at $61.38): +$2,503.05
= ($61.38-$55.10)*400 - $8.95 commissions
(c) Capital Appreciation (If UFS assigned at $65.00): +$3,951.05
= ($65.00-$55.10)*400 - $8.95 commissions
Total Net Profit(If UFS price unchanged at $61.38): +$1,935.25
= (-$667.80 +$100.00 +$2,503.05)
Total Net Profit(If UFS assigned at $65.00): +$3,383.25
= (-$667.80 +$100.00 +$3,951.05)
Absolute Return (If UFS unchanged at $61.38): +8.8%
= +$1,935.25/$22,048.95
Annualized Return If Unchanged (ARIU): +36.8%
= (+$1,935.25/$22,048.95)*(365/87 days)
Absolute Return if Exercised at $55.00: +15.3%
= +$3,383.25/$22,048.95
Annualized Return If Exercised (ARIE): +64.4%
= (+$3,383.25/$22,048.95)*(365/87 days)
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