The Covered Calls Advisor Portfolio (CCAP) contained a total of twelve covered calls positions with January 2011 expirations, with the following results:
- Decisions were made earlier this week to roll-up-and-out from two existing in-the-money Jan2011 covered calls positions (Petrobras and Research in Motion Ltd.) into Feb2011 positions. Separate posts were made on this blog earlier this week for each of these transactions on the day they occurred.
Of the remaining ten positions that were held until Jan2011 expiration this past Friday:
- Six positions (Bank of America, Domtar Corp, International Paper, iShares MSCI South Korea ETF, Microsoft Corp., and UnitedHealth Group) finished in-the-money. The calls were exercised and the shares were called away.
The annualized return-on-investment results achieved on these six assigned positions were as follows:
1. Bank of America Corp. -- -13.5%
2. Domtar Corp. -- +73.3%
3. International Paper Co. -- +55.1%
4. iShares MSCI South Korea ETF -- +59.1%
5. Microsoft Corp. -- +23.0%
6. UnitedHealth Group -- +25.2%
Detailed results for each of these six covered calls positions that were assigned (called away) upon Jan2011 expiration are described below.
- The remaining four positions in the CCAP (Apple Inc., Intel Corp., iShares MSCI China ETF, and iShares MSCI Emerging Markets ETF) ended out-of-the-money. Decisions will be made to either sell the equities, or to keep them and sell calls to establish Feb2011 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.
The overall performance results for the six assigned Jan2011 covered calls positions were as follows:
1. Bank of America Corp.(BAC) -- Closed
The transactions history to date for Bank of America Corp.(BAC) is as follows:
06/21/2010 Bought 400 BAC @ $16.04
06/21/2010 Sold 4 BAC Jul2010 $16.00 Calls @ $.58
07/17/2010 Jul2010 Options Expired
Note: The closing price of BAC was $13.98 on expiration Friday.
07/22/2010 Sold 4 BAC Aug2010 $14.00 Calls @ $.50
Note: The price of BAC was $13.87 today when this option was sold.
08/21/2010 Aug2010 Option Expired
Note: The closing price of BAC was $12.86 on expiration Friday.
09/01/2010 Ex-Dividend $4.00 = $.01*400 shares
09/03/2010 Sold 4 BAC Oct2010 $14.00 Call Options @ $.38
Note: The price of BAC was $13.41 today when these options were sold.
10/16/2010 Oct2010 options expired.
Note: The closing price of BAC was $11.98 on expiration Friday.
11/04/2010 Sold 4 BAC Nov2010 $12.00 Call Options @ $.26
Note: The price of BAC was $11.84 today when these options were sold.
11/20/2010 Nov2010 Options Expired
Note: The closing price of BAC was $11.65 on expiration Friday.
12/01/2010 Ex-Dividend $4.00 = $.01*400 shares
12/02/2010 Sell-to-Open (STO) 4 BAC Jan2011 $12.50 Call Options @ $.34
Note: The price of BAC was $11.59 and the implied volatility was about 39 today when these options were sold. The Jan2011 expiration was selected instead on the usual near-month (Dec2010 in this case) expiration since the option premium of $.17 was below the minimum of $.25 per contract required by the Covered Calls Advisor.
01/07/2011 Buy-to-Close (BTC) 4 BAC Jan2011 $12.50 Call Options @ $1.61
01/07/2011 Sell-to-Open (STO) 4 BAC Jan2011 $14.00 Call Options @ $.49
Note: the price of BAC was $14.11 today when the limit order to sell these calls at $.49 was transacted.
01/22/2011 Jan2011 Options Expired.
Note: the price of BAC was $14.25 upon options expiration.
The overall performance result(including commissions) for the Bank of America Corp.(BAC) transactions was as follows:
Stock Purchase Cost: $6,424.95
= ($16.04*400+$8.95 commission)
Net Profit:
(a) Options Income: +$304.30
= [400*($.58+$.50+$.38+$.26+$.34-$1.61+$.49) - 7*$11.95 commissions]
(b) Dividend Income: +$8.00 = 2x($.01*400 shares)
(c) Capital Appreciation (Stock assigned at $14.00): -$824.95
= ($14.00-$16.04)*400 - $8.95 commissions
Total Net Profit(Stock assigned at $14.00): -$512.65
= (+$304.30 +$8.00 -$824.95)
Absolute Return (Stock Assigned at $14.00): -8.0%
= -$512.65/$6,424.95
Annualized Return: -13.5%
= (-$512.65/$6,424.95)*(365/215 days)
2. Domtar Corp.(UFS) -- Closed
The transactions history is as follows:
11/22/2010 Bought 300 UFS @ $78.20
11/22/2010 Sold 3 UFS Dec2010 $80.00 Calls @ $2.35
12/18/2010 Dec2010 Options Expired
Note: The price of UFS was $76.16 upon Dec2010 options expiration.
12/21/2010 Sold 3 UFS Jan2011 $80.00 Calls @ $1.85
Note: The price of UFS was $77.94 when these options were sold.
01/22/2011 Jan2011 Options Expired.
Note: the price of UFS was $81.50 upon options expiration.
The overall performance result(including commissions) for the Domtar Corp.(UFS) transactions was as follows:
Stock Purchase Cost: $23,468.95
= ($78.20*300+$8.95 commission)
Net Profit:
(a) Options Income: +$1,237.60
= (300*($2.35+$1.85) - 2*$11.20 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (UFS assigned at $80.00): +$531.05
= ($80.00-$78.20)*300 - $8.95 commissions
Total Net Profit(UFS assigned at $80.00): +$1,768.65
= (+$1,237.60 +$0.00 +$531.05)
Absolute Return (Stock Assigned at $80.00): +45.1%
= +$1,768.65/$23,468.95
Annualized Return: +73.3%
= (+$1,768.65/$23,468.95)*(365/61 days)
3. International Paper Co.(IP) -- Closed
The transactions history to date for International Paper Co.(IP) is as follows:
11/09/2010 Bought 300 IP @ $25.82
11/09/2010 Sold 3 IP Nov2010 $25.00 Calls @ $1.05
11/19/2010 Ex-Dividend $38.25 = $.1275*300 shares
11/20/2010 Nov2010 Options Expired
Note: The closing price of IP was $24.80 on expiration Friday.
11/24/2010 Sold 3 IP Dec2010 $26.00 Calls @ $.53
Note: The price of IP was $25.40 when the call options were sold.
12/13/2010 Buy-to-Close (BTC) 3 IP Dec2010 $26.00 Call Options @ $.97
12/13/2010 Sell-to-Open (STO) 3 IP Jan2011 $27.00 Call Options @ $1.15
Note: The price of IP was $27.04 when the call options were sold.
01/22/2011 Jan2011 Options Expired.
Note: the price of IP was $27.91 upon options expiration.
A possible overall performance result(including commissions) for the IP transactions would be as follows:
Stock Purchase Cost: $7,754.95
= ($25.82*300+$8.95 commission)
Net Profit:
(a) Options Income: +$483.20
= (300*($1.05+$.53-$.97+$1.15) - 4*$11.20 commissions)
(b) Dividend Income): +$38.25 = ($.1275 * 300 shares) Note: Ex-Div was on 11/19/2010
(c) Capital Appreciation (Stock assigned at $27.00): +$345.05
= ($27.00-$25.82)*300 - $8.95 commissions
Total Net Profit (Stock assigned at $27.00 at Jan2011 expiration): +$866.50
= (+$483.20 +$38.25 +$345.05)
Absolute Return (Stock assigned at $27.00 at Jan2011 expiration): +11.2%
= +$866.50/$7,754.95
Annualized Return: +55.1%
= (+$866.50/$7,754.95)*(365/74 days)
4. iShares MSCI South Korea ETF
The transactions history to date for iShares MSCI South Korea ETF (EWY) is as follows:
11/26/2010 Bought 300 EWY @ $53.67
11/26/2010 Sold 3 EWY Dec2010 $55.00 Calls @ $1.18
12/15/2010 Buy-to-Close (BTC) 3 EWY Dec2010 $55.00 Call Options @ $3.05
12/15/2010 Sell-to-Open (STO) 3 EWY Jan2011 $59.00 Call Options @ $1.43
12/21/2010 Income Distribution $50.73 = $.16910 * 300 shares
01/22/2011 Jan2011 Options Expired.
Note: the price of EWY was $61.11 upon options expiration.
The overall performance result(including commissions) for the EWY transactions was as follows:
Stock Purchase Cost: $16,109.95
= ($53.67*300+$8.95 commission)
Net Profit:
(a) Options Income: -$154.40
= [300*($1.18-$3.05+$1.43) - 2*$11.20 commissions]
(b) Distribution Income: +$50.73 = $.16910 * 300 shares
(c) Capital Appreciation (EWY assigned at $59.00): +$1,590.05
= ($59.00-$53.67)*300 - $8.95 commissions
Total Net Profit(EWY assigned at $59.00): +$1,486.38
= (-$154.40 +$50.73 +$1,590.05)
Absolute Return (EWY Assigned at $59.00): +9.2%
= +$1,486.38/$16,109.95
Annualized Return: +59.1%
= (+$1,486.38/$16,109.95)*(365/57 days)
5. Microsoft Corp.(MSFT) -- Closed
The transactions history to date for Microsoft Corporation (MSFT) is as follows:
07/23/2010 Bought 500 MSFT @ $25.47
07/23/2010 Sold 5 MSFT Aug2010 $26.00 Calls @ $.44
08/17/2010 Ex-Dividend $65.00 = $.13 * 500 shares
08/21/2010 Aug2010 Options Expired
Note: The closing price of MSFT was $24.23 on expiration Friday.
09/03/2010 Sold 5 MSFT Oct2010 $25.00 Call Options @ $.49
Note: The price of MSFT was $24.31 today when these options were sold.
10/15/2010 Buy-to-Close (BTC) 5 MSFT Oct2010 $25.00 Call Options @ $.32
10/15/2010 Sell-to-Open (STO) 5 MSFT Nov2010 $26.00 Call Options @ $.47
11/16/2010 Ex-Dividend $80.00 = $.16 * 500 shares
11/20/2010 Nov2010 Options Expired
Note: The closing price of MSFT was $25.69 on expiration Friday.
12/01/2010 Sell-to-Open (STO) 5 MSFT Dec2010 $26.00 Call Options @ $.44
Note: The price of MSFT was $25.95 today when these options were sold.
12/14/2010 Buy-to-Close (BTC) 5 MSFT Dec2010 $26.00 Call Options @ $1.43
12/14/2010 Sell-to-Open (STO) 5 MSFT Jan2011 $27.50 Call Options @ $.70
Note: The price of MSFT was $27.41 today when these options were sold.
01/22/2011 Jan2011 Options Expired.
Note: the price of MSFT was $28.02 upon options expiration.
Two possible overall performance results(including commissions) for the Microsoft Corp.(MSFT) transactions would be as follows:
Stock Purchase Cost: $12,743.95
= ($25.47*500+$8.95 commission)
Net Profit:
(a) Options Income: +$318.80
= (500*($.44+$.49-$.32+$.47+$.44-$1.43+$.70) - 6*$12.70 commissions)
(b) Dividend Income: +$145.00 = ($.13 * 500 shares + $.16 * 500 shares)
(c) Capital Appreciation (Stock assigned at $27.50): +$1,006.05
= ($27.50-$25.47)*500 - $8.95 commissions
Total Net Profit(Stock assigned at $27.50): +$1,469.85
= (+$318.80 +$145.00 +$1,006.05)
Absolute Return (Stock Assigned at $27.50): +11.5%
= +$1,469.85/$12,743.95
Annualized Return (Stock Assigned at $27.50): +23.0%
= (+$1,469.85/$12,743.95)*(365/183 days)
6. UnitedHealth Group Inc.(UNH) -- Closed
The transactions history to date for UnitedHealth Group Inc.(UNH) is as follows:
12/22/2010 Bought 300 UNH @ $35.55
12/22/2010 Sell-to-Open(STO) 3 UNH Jan2011 $35.00 CallS @ $1.38
01/22/2011 Jan2011 Options Expired.
Note: the price of UNH was $40.41 upon options expiration.
The overall performance result(including commissions) for the UNH transactions was as follows:
Stock Purchase Cost: $10,673.95
= ($35.55*300+$8.95 commission)
Net Profit:
(a) Options Income: +$402.80
= (300*$1.38 - $11.20 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (Stock assigned at $35.00): -$173.95
= ($35.00-$35.55)*300 - $8.95 commissions
Total Net Profit(Stock assigned at $35.00): +$228.85
= (+$402.80 +$0.00 -$173.95)
Absolute Return (Stock Assigned at $35.00): +2.1%
= +$228.95/$10,673.95
Annualized Return: +25.2%
= (+$228.95/$10,673.95)*(365/31 days)
