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)
Establish International Paper Co.(IP) Covered Calls
The Covered Calls Advisor's prior covered calls position in IP was assigned at Apr2011 expiration for a nice profit, yet the upside potential remains. So, a new covered calls position was established in the Covered Calls Advisor Portfolio(CCAP) with the purchase of International Paper Co.(IP) covered calls as follows:Established International Paper Co.(IP) Covered Calls for May2011:
04/20/2011 Bought 500 IP @ $30.09
04/20/2011 Sold 5 IP May2011 $31.00 Calls @ $.51
International Paper Company operates as a paper and packaging company with operations in North America, Europe, Latin America, the Russian Federation, Asia, and north Africa. Its Printing Papers segment produces uncoated printing and writing papers, including uncoated papers, market pulp, and uncoated bristols. The company's Industrial Packaging segment manufactures containerboards. Its products include linerboard, medium, whitetop, recycled linerboard, recycled medium, and saturated kraft. Its Consumer Packaging segment produces coated paperboard for various packaging and commercial printing end uses. The company's Distribution segment provides services and products to various customer markets, supplying commercial printers with printing papers and graphic pre-press, printing presses, and post-press equipment; the building services and away-from-home markets with facility supplies; and manufacturers with packaging supplies and equipment, as well as offers warehousing and delivery services. Its Forest Products segment owns and manages forest lands primarily in the United States.
Two possible overall performance results(including commissions) for the International Paper Co.(IP) transactions would be as follows:
Stock Purchase Cost: $15,053.95
= ($30.09*500+$8.95 commission)
Net Profit:
(a) Options Income: +$267.70
= (500*$.51 - $12.70 commissions)
(b) Dividend Income: $131.25 ($.2625 * 500 shares). Ex-div date is 5/13/2011.
(c) Capital Appreciation (If stock unchanged at $30.09 at expiration): -$8.95
= ($30.09-$30.09)*500 - $8.95 commissions
(c) Capital Appreciation (If stock assigned at $31.00): +$446.05
= ($31.00-$30.09)*500 - $8.95 commissions
Total Net Profit (If stock price unchanged at $30.09 at expiration): +$390.00
= (+$267.70 +$131.25 -$8.95)
Total Net Profit (If stock assigned at $31.00): +$845.00
= (+$267.70 +$131.25+$446.05)
1. Absolute Return (If stock unchanged at $30.09 at expiration): +2.6%
= +$390.00/$15,053.95
Annualized Return (If stock unchanged at expiration): +30.5%
= (+$390.00/$15,053.95)*(365/31 days)
2. Absolute Return (If stock assigned at $31.00 at expiration): +5.6%
= +$845.00/$15,053.95
Annualized Return (If stock assigned at $31.00): +66.1%
= (+$845.00/$15,053.95)*(365/31 days)
The downside breakeven price at expiration is at $29.58 ($30.09 - $.51).
Using the Black-Scholes Options Pricing Model in the Schwab Hypothetical Options Pricing calculator, the resulting probability of making a profit (if held until May2011 options expiration) for this International Paper Co.(IP) covered calls position is 58.7%. This compares with a probability of profit of 49.9% for a buy-and-hold of International Paper Co.(IP) over the same time period.
Tuesday, April 19, 2011
Establish iShares MSCI Emerging Markets ETF and iShares MSCI South Korea ETF Covered Calls
Yesterday, 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).
Today, with equity prices rebounding from yesterday's sell-off, covered calls positions were established against the shares held in EEM and EWY. The transactions as well as some potential results are detailed below.
1. iShares MSCI Emerging Markets ETF (EEM)
The transactions were as follows:
04/18/2011 Bought 500 EEM @ $47.81
04/19/2011 Sold 5 EEM May2011 $49.00 Calls @ $.83
Note: the price of EEM was $48.32 when the calls were sold.
Two possible overall performance results(including commissions) for these iShares MSCI Emerging Markets ETF (EEM) transactions would be as follows:
Stock Purchase Cost: $23,913.95
= ($47.81*500+$8.95 commission)
Net Profit:
(a) Options Income: +$402.30
= (500*$.83 - $12.70 commissions)
(b) Dividend Income: $0.00
(c) Capital Appreciation (If stock unchanged at $47.81 at expiration): -$8.95
= ($47.81-$47.81)*500 - $8.95 commissions
(c) Capital Appreciation (If stock assigned at $49.00): +$586.05
= ($49.00-$47.81)*500 - $8.95 commissions
Total Net Profit (If stock price unchanged at expiration): +$393.35
= (+$402.30 +$0.00 -$8.95)
Total Net Profit (If stock assigned at $49.00): +$988.35
= (+$402.30 +$0.00 +$586.05)
1. Absolute Return (If stock unchanged at $47.81 at expiration): +1.6%
= +$393.35/$23,913.95
Annualized Return (If stock unchanged at expiration): +18.2%
= (+$393.35/$23,913.95)*(365/33 days)
2. Absolute Return (If stock assigned at $49.00 at expiration): +4.1%
= +$988.35/$23,913.95
Annualized Return (If stock assigned at $49.00): +45.7%
= (+$988.35/$23,913.95)*(365/33 days)
2. iShares MSCI South Korea ETF (EWY)
The transactions were as follows:
04/18/2011 Bought 600 EWY @ $64.17
04/19/2011 Sold 6 EWY May2011 $66.00 Calls @ $1.39
Note: the price of EWY was $65.20 when the calls were sold.
Two possible overall performance results(including commissions) for these iShares MSCI South Korea ETF (EWY) transactions would be as follows:
Stock Purchase Cost: $38,510.95
= ($64.17*600+$8.95 commission)
Net Profit:
(a) Options Income: +$820.55
= (600*$1.39 - $13.45 commissions)
(b) Dividend Income: $0.00
(c) Capital Appreciation (If stock unchanged at $64.17 at expiration): -$8.95
= ($64.17-$64.17)*600 - $8.95 commissions
(c) Capital Appreciation (If stock assigned at $66.00): +$1,089.05
= ($66.00-$64.17)*600 - $8.95 commissions
Total Net Profit (If stock price unchanged at expiration): +$811.60
= (+$820.55 +$0.00 -$8.95)
Total Net Profit (If stock assigned at $66.00): +$1,909.60
= (+$820.55 +$0.00 +$1,089.05)
1. Absolute Return (If stock unchanged at $64.17 at expiration): +2.1%
= +$811.60/$38,510.95
Annualized Return (If stock unchanged at expiration): +23.3%
= (+$811.60/$38,510.95)*(365/33 days)
2. Absolute Return (If stock assigned at $66.00 at expiration): +5.0%
= +$1,909.60/$38,510.95
Annualized Return (If stock assigned at $66.00): +54.8%
= (+$1,909.60/$38,510.95)*(365/33 days)
Today, with equity prices rebounding from yesterday's sell-off, covered calls positions were established against the shares held in EEM and EWY. The transactions as well as some potential results are detailed below.
1. iShares MSCI Emerging Markets ETF (EEM)
The transactions were as follows:
04/18/2011 Bought 500 EEM @ $47.81
04/19/2011 Sold 5 EEM May2011 $49.00 Calls @ $.83
Note: the price of EEM was $48.32 when the calls were sold.
Two possible overall performance results(including commissions) for these iShares MSCI Emerging Markets ETF (EEM) transactions would be as follows:
Stock Purchase Cost: $23,913.95
= ($47.81*500+$8.95 commission)
Net Profit:
(a) Options Income: +$402.30
= (500*$.83 - $12.70 commissions)
(b) Dividend Income: $0.00
(c) Capital Appreciation (If stock unchanged at $47.81 at expiration): -$8.95
= ($47.81-$47.81)*500 - $8.95 commissions
(c) Capital Appreciation (If stock assigned at $49.00): +$586.05
= ($49.00-$47.81)*500 - $8.95 commissions
Total Net Profit (If stock price unchanged at expiration): +$393.35
= (+$402.30 +$0.00 -$8.95)
Total Net Profit (If stock assigned at $49.00): +$988.35
= (+$402.30 +$0.00 +$586.05)
1. Absolute Return (If stock unchanged at $47.81 at expiration): +1.6%
= +$393.35/$23,913.95
Annualized Return (If stock unchanged at expiration): +18.2%
= (+$393.35/$23,913.95)*(365/33 days)
2. Absolute Return (If stock assigned at $49.00 at expiration): +4.1%
= +$988.35/$23,913.95
Annualized Return (If stock assigned at $49.00): +45.7%
= (+$988.35/$23,913.95)*(365/33 days)
2. iShares MSCI South Korea ETF (EWY)
The transactions were as follows:
04/18/2011 Bought 600 EWY @ $64.17
04/19/2011 Sold 6 EWY May2011 $66.00 Calls @ $1.39
Note: the price of EWY was $65.20 when the calls were sold.
Two possible overall performance results(including commissions) for these iShares MSCI South Korea ETF (EWY) transactions would be as follows:
Stock Purchase Cost: $38,510.95
= ($64.17*600+$8.95 commission)
Net Profit:
(a) Options Income: +$820.55
= (600*$1.39 - $13.45 commissions)
(b) Dividend Income: $0.00
(c) Capital Appreciation (If stock unchanged at $64.17 at expiration): -$8.95
= ($64.17-$64.17)*600 - $8.95 commissions
(c) Capital Appreciation (If stock assigned at $66.00): +$1,089.05
= ($66.00-$64.17)*600 - $8.95 commissions
Total Net Profit (If stock price unchanged at expiration): +$811.60
= (+$820.55 +$0.00 -$8.95)
Total Net Profit (If stock assigned at $66.00): +$1,909.60
= (+$820.55 +$0.00 +$1,089.05)
1. Absolute Return (If stock unchanged at $64.17 at expiration): +2.1%
= +$811.60/$38,510.95
Annualized Return (If stock unchanged at expiration): +23.3%
= (+$811.60/$38,510.95)*(365/33 days)
2. Absolute Return (If stock assigned at $66.00 at expiration): +5.0%
= +$1,909.60/$38,510.95
Annualized Return (If stock assigned at $66.00): +54.8%
= (+$1,909.60/$38,510.95)*(365/33 days)
Sunday, April 17, 2011
April 2011 Expiration Transactions
The Covered Calls Advisor Portfolio (CCAP) contained a total of eleven covered calls positions with April 2011 expirations, with the following results:
- Six covered calls positions (International Paper, iShares MSCI Brazil ETF, iShares MSCI China ETF, iShares MSCI Emerging Markets ETF, iShares MSCI South Korea ETF, and Sprint Nextel) 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. International Paper Co. -- +57.1%
2. iShares MSCI Brazil ETF -- +40.7%
3. iShares MSCI China ETF -- +12.7%
4. iShares MSCI Emerging Markets ETF -- +22.1%
5. iShares MSCI South Korea ETF -- +64.8%
6. Sprint Nextel Corp. -- +50.1%
- The remaining five covered calls positions in the CCAP (Apple Inc., Best Buy Corp., Freeport McMoRan Copper and Gold Inc., Microsoft Corp., and Petrobras) ended out-of-the-money. Decisions will be made to either sell the equities, or to keep them and sell calls to establish May2011 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 Apr2011 covered calls positions were as follows:
1. International Paper Co.(IP) -- Closed
The transactions history was as follows:
03/03/2011 Bought 700 IP @ $26.97
03/03/2011 Sold 7 IP Mar2011 $28.00 Calls @ $.36
03/19/2011 Mar2011 Options Expired
03/21/2011 Sold 7 IP Apr2011 $28.00 Calls @ $.52
Note: price of IP stock was $26.97 when these options were sold.
04/16/2011 Apr2011 IP Options Expired.
Note: the price of IP was $29.95 upon options expiration.
The overall performance results(including commissions) for the International Paper Co.(IP) transactions was as follows:
Stock Purchase Cost: $18,887.95
= ($26.97*700+$8.95 commission)
Net Profit:
(a) Options Income: +$587.60
= (700*($.36+$.52) - 2*$14.20 commissions)
(b) Dividend Income: $0.00
(c) Capital Appreciation (Stock assigned at $28.00): +$712.05
= ($28.00-$26.97)*700 - $8.95 commissions
Total Net Profit (Stock assigned at $28.00): +$1,299.65
= (+$587.60 +$0.00 +$712.05)
Absolute Return (Stock assigned at $28.00 at expiration): +6.9%
= +$1,299.65/$18,887.95
Annualized Return: +57.1%
= (+$1,299.65/$18,887.95)*(365/44 days)
2. iShares MSCI Brazil ETF (EWZ) -- Closed
The transactions history was as follows:
01/28/2011 Bought 200 EWZ @ $72.119
01/28/2011 Sold 2 EWZ Feb2011 $73.00 Calls @ $1.45
02/18/2011 Buy-to-Close (BTC) 2 PBR Feb2011 $73.00 Call Options @ $1.61
02/18/2011 Sell-to-Open (STO) 2 PBR Mar2011 $74.00 Call Options @ $2.32
03/19/2011 Mar2011 Options Expired
03/22/2011 Sold 2 EWZ Apr2011 $75.00 Calls @ $1.44
Note: price of EWZ was $74.38 when these options were sold.
04/16/2011 Apr2011 EWZ Options Expired.
Note: the price of EWZ was $77.11 upon options expiration.
The overall performance results(including commissions) for the iShares MSCI Brazil ETF (EWZ) transactions was as follows:
Stock Purchase Cost: $14,432.75
= ($72.119*200+$8.95 commission)
Net Profit:
(a) Options Income: +$688.65
= (200*($1.45-$1.61+$2.32+$1.44) - 3*$10.45 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (EWZ assigned at $75.00): +$567.25
= ($75.00-$72.119)*200 - $8.95 commissions
Total Net Profit(EWZ assigned at $75.00): +$1,255.90
= (+$688.65 +$0.00 +$567.25)
Absolute Return (EWZ assigned at $75.00): +8.7%
= +$1,255.90/$14,432.75
Annualized Return: +40.7%
= (+$1,255.90/$14,432.75)*(365/78 days)
3. iShares MSCI China ETF (FXI) -- Closed
The transactions history is as follows:
06/21/2010 Bought 1,100 FXI @ $41.85
06/21/2010 Sold 11 FXI Jul2010 $43.00 Calls @ $.71
7/17/2010 Jul2010 Options Expired
Note: The closing price of FXI was $38.74 on expiration Friday.
07/22/2010 Sold 7 FXI Aug2010 $42.00 Calls @ $.73
07/22/2010 Sold 4 FXI Aug2010 $43.00 Calls @ $.42
Note: The price of FXI was $41.02 today when these options were sold.
08/21/2010 Aug2010 Option Expired
Note: The closing price of FXI was $40.54 on expiration Friday.
09/02/2010 Sold 11 FXI Sep2010 $42.00 Call Options @ $.20
Note: The price of FXI was $40.52 today when these options were sold.
09/17/2010 Sep2010 Options Expired
09/20/2010 Sell-to-Open (STO) 11 FXI Oct2010 $43.00 Call Options @ $.62
Note: The price of FXI was $42.19 today when these options were sold.
10/14/2010 Buy-to-Close (BTC) 11 FXI Oct2010 $43.00 Call Options @ $2.69
10/14/2010 Sell-to-Open (STO) 11 FXI Nov2010 $47.00 Call Options @ $.85
11/20/2010 Nov2010 Options Expired
Note: The closing price of FXI was $44.66 on expiration Friday.
12/01/2010 Sell-to-Open (STO) 11 FXI Jan2011 $47.00 Call Options @ $.63
Note: The price of FXI was $44.41 today when these options were sold.
12/20/2010 Income Distribution $186.11 = ($.16919 * 1100 shares)
01/22/2011 Jan2011 FXI options expired
Note: The price of FXI was $43.23 at closing on expiration Friday.
01/24/2011 Sold 3 FXI Feb2011 $44.00 Calls @ $.55
Note: The price of FXI was $43.04 when these options were sold.
02/19/2011 Feb2011 FXI options expired
02/28/2011 Sold 11 FXI Apr2011 $44.00 Calls @ $.67
Note: The price of FXI was $42.41 when these Call options were sold.
04/16/2011 Apr2011 FXI Options Expired.
Note: the price of FXI was $45.79 upon options expiration.
The overall performance results(including commissions) for the iShares MSCI China ETF (FXI) transactions was as follows:
Stock Purchase Cost: $46,043.95
= ($41.85*1,100+$8.95 commission)
Net Profit:
(a) Options Income: +$2,235.65
= (1,100*($.71+$.20+$.62-$2.69+$.85+$.63+$.55+$.67) + 700*$.73 + 400*$.40 - ($17.20*6 +$14.20 +$11.95) commissions)
(b) Distribution Income: +$186.11 = ($.16919 * 1100 shares)
(c) Capital Appreciation (FXI shares are assigned at $44.00): +$2,356.05
= ($44.00-$41.85)*1,100 - $8.95 commissions
Total Net Profit (FXI shares assigned at $44.00): +$4,777.81
= (+$2,235.65 +$186.11 +$2,356.05)
Absolute Return (FXI assigned at $44.00): +10.4%
= +$4,777.81/$46,043.95
Annualized Return: +12.7%
= (+$4,777.81/$46,043.95)*(365/299 days)
4. iShares MSCI Emerging Markets ETF (EEM) -- Closed
The transactions history is as follows:
10/27/2010 Bought 300 EEM @ $45.55
10/27/2010 Sold 3 EEM Nov2010 $46.00 Calls @ $.99
11/19/2010 Buy-to-Close (BTC) 3 EEM Nov2010 $46.00 Call Options @ $.38
11/19/2010 Sell-to-Open (STO) 3 EEM Dec2010 $47.00 Call Options @ $1.02
12/18/2010 Dec2010 Options Expired
Note: The price of EEM was $46.40 upon Dec2010 options expiration.
12/21/2010 Sold 3 EEM Jan2011 $47.00 Calls @ $.77
Note: The price of EEM was $46.43 when these options were sold.
12/21/2010 Distribution Income $107.83 = $.35942 * 300 shares
12/29/2010 Distribution Income $7.54 = $.02512 * 300 shares
01/22/2011 Jan2011 EEM options expired
Note: The price of EEM was $46.49 at closing on expiration Friday.
01/24/2011 Sold 3 EEM Feb2011 $47.00 Calls @ $.92
Note: The price of EEM was $46.65 when these options were sold.
02/19/2011 Feb2011 EEM options expired
02/28/2011 Sold 3 EEM Mar2011 $46.00 Calls @ $.79
Note: The price of EEM was $45.86 when these Call options were sold.
04/16/2011 Apr2011 EEM Options Expired.
Note: the price of EEM was $49.13 upon options expiration.
The overall performance results(including commissions) for the EEM transactions were as follows:
Stock Purchase Cost: $13,673.95
= ($45.55*300+$8.95 commission)
Net Profit:
(a) Options Income: +$1,177.00
= (300*($.99-$.38+$1.02+$.77+$.92+$.79) - 5*$11.20 commissions)
(b) Distribution Income: +$115.37 = $107.83 + $7.54
(c) Capital Appreciation (Stock assigned at $46.00): +$126.05
= ($46.00-$45.55)*300 - $8.95 commissions
Total Net Profit (EEM shares assigned at $47.00): +$1,418.42
= (+$1,177.00 +$115.37 +$126.05)
Absolute Return if Assigned at $46.00: +10.4%
= +$1,418.42/$13,673.95
Annualized Return If Assigned (ARIA): +22.1%
= (+$1,418.42/$13,673.95)*(365/171 days)
5. iShares MSCI South Korea ETF (EWY) -- Closed
The transactions history was as follows:
02/22/2011 Bought 300 EWY @ $58.03
02/22/2011 Sold 3 EWY Mar2011 $59.00 Calls @ $1.38
Note: these call options were sold with the price of EWY at $58.53
03/19/2011 Mar2011 Options Expired
03/21/2011 Sold 3 EWY Apr2011 $61.00 Calls @ $1.22
Note: price of EWY was $60.10 when these options were sold.
04/16/2011 Apr2011 EWY Options Expired.
Note: the price of EWY was $65.62 upon options expiration.
Two possible overall performance results(including commissions) for the EWY transactions would be as follows:
Stock Purchase Cost: $17,417.95
= ($58.03*300+$8.95 commission)
Net Profit:
(a) Options Income: +$757.60
= (300*($1.38+$1.22) - 2*$11.20 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (EWY shares assigned at $61.00): +$882.05
= ($61.00-$58.03)*300 - $8.95 commissions
Total Net Profit(EWY assigned at $61.00): +$1,639.65
= (+$757.60 +$0.00 +$882.05)
Absolute Return (EWY assigned at $61.00): +9.4%
= +$1,639.65/$17,417.95
Annualized Return: +64.8%
= (+$1,639.65/$17,417.95)*(365/53 days)
6. Sprint Nextel Corp.(S) -- Closed
The transactions history was as follows:
02/03/2011 Bought 1500 S @ $4.32
02/03/2011 Sold 15 S Feb2011 $4.50 Calls @ $.12
02/19/2011 Feb2011 S options expired
02/28/2011 Sold 15 S Apr2011 $4.50 Calls @ $.16
Note: The price of S was $4.37 when these Call options were sold.
04/16/2011 Apr2011 S Options Expired.
Note: the price of S was $4.81 upon options expiration.
The overall performance results(including commissions) for the Sprint Nextel Corp.(S) transactions was as follows:
Stock Purchase Cost: $6,488.95
= ($4.32*1500+$8.95 commission)
Net Profit:
(a) Options Income: +$379.60
= [1500*($.12+$.16) - 2*$20.20 commissions]
(b) Dividend Income: +$0.00
(c) Capital Appreciation (Sprint assigned at $4.50): +$261.05
= ($4.50-$4.32)*1500 - $8.95 commissions
Total Net Profit(Sprint stock assigned at $4.50): +$640.65
= (+$379.60 +$0.00 +$261.05)
Absolute Return (Stock Assigned at $4.50): +9.9%
= +$640.65/$6,488.95
Annualized Return: +50.1%
= (+$640.65/$6,488.95)*(365/72 days)
- Six covered calls positions (International Paper, iShares MSCI Brazil ETF, iShares MSCI China ETF, iShares MSCI Emerging Markets ETF, iShares MSCI South Korea ETF, and Sprint Nextel) 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. International Paper Co. -- +57.1%
2. iShares MSCI Brazil ETF -- +40.7%
3. iShares MSCI China ETF -- +12.7%
4. iShares MSCI Emerging Markets ETF -- +22.1%
5. iShares MSCI South Korea ETF -- +64.8%
6. Sprint Nextel Corp. -- +50.1%
- The remaining five covered calls positions in the CCAP (Apple Inc., Best Buy Corp., Freeport McMoRan Copper and Gold Inc., Microsoft Corp., and Petrobras) ended out-of-the-money. Decisions will be made to either sell the equities, or to keep them and sell calls to establish May2011 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 Apr2011 covered calls positions were as follows:
1. International Paper Co.(IP) -- Closed
The transactions history was as follows:
03/03/2011 Bought 700 IP @ $26.97
03/03/2011 Sold 7 IP Mar2011 $28.00 Calls @ $.36
03/19/2011 Mar2011 Options Expired
03/21/2011 Sold 7 IP Apr2011 $28.00 Calls @ $.52
Note: price of IP stock was $26.97 when these options were sold.
04/16/2011 Apr2011 IP Options Expired.
Note: the price of IP was $29.95 upon options expiration.
The overall performance results(including commissions) for the International Paper Co.(IP) transactions was as follows:
Stock Purchase Cost: $18,887.95
= ($26.97*700+$8.95 commission)
Net Profit:
(a) Options Income: +$587.60
= (700*($.36+$.52) - 2*$14.20 commissions)
(b) Dividend Income: $0.00
(c) Capital Appreciation (Stock assigned at $28.00): +$712.05
= ($28.00-$26.97)*700 - $8.95 commissions
Total Net Profit (Stock assigned at $28.00): +$1,299.65
= (+$587.60 +$0.00 +$712.05)
Absolute Return (Stock assigned at $28.00 at expiration): +6.9%
= +$1,299.65/$18,887.95
Annualized Return: +57.1%
= (+$1,299.65/$18,887.95)*(365/44 days)
2. iShares MSCI Brazil ETF (EWZ) -- Closed
The transactions history was as follows:
01/28/2011 Bought 200 EWZ @ $72.119
01/28/2011 Sold 2 EWZ Feb2011 $73.00 Calls @ $1.45
02/18/2011 Buy-to-Close (BTC) 2 PBR Feb2011 $73.00 Call Options @ $1.61
02/18/2011 Sell-to-Open (STO) 2 PBR Mar2011 $74.00 Call Options @ $2.32
03/19/2011 Mar2011 Options Expired
03/22/2011 Sold 2 EWZ Apr2011 $75.00 Calls @ $1.44
Note: price of EWZ was $74.38 when these options were sold.
04/16/2011 Apr2011 EWZ Options Expired.
Note: the price of EWZ was $77.11 upon options expiration.
The overall performance results(including commissions) for the iShares MSCI Brazil ETF (EWZ) transactions was as follows:
Stock Purchase Cost: $14,432.75
= ($72.119*200+$8.95 commission)
Net Profit:
(a) Options Income: +$688.65
= (200*($1.45-$1.61+$2.32+$1.44) - 3*$10.45 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (EWZ assigned at $75.00): +$567.25
= ($75.00-$72.119)*200 - $8.95 commissions
Total Net Profit(EWZ assigned at $75.00): +$1,255.90
= (+$688.65 +$0.00 +$567.25)
Absolute Return (EWZ assigned at $75.00): +8.7%
= +$1,255.90/$14,432.75
Annualized Return: +40.7%
= (+$1,255.90/$14,432.75)*(365/78 days)
3. iShares MSCI China ETF (FXI) -- Closed
The transactions history is as follows:
06/21/2010 Bought 1,100 FXI @ $41.85
06/21/2010 Sold 11 FXI Jul2010 $43.00 Calls @ $.71
7/17/2010 Jul2010 Options Expired
Note: The closing price of FXI was $38.74 on expiration Friday.
07/22/2010 Sold 7 FXI Aug2010 $42.00 Calls @ $.73
07/22/2010 Sold 4 FXI Aug2010 $43.00 Calls @ $.42
Note: The price of FXI was $41.02 today when these options were sold.
08/21/2010 Aug2010 Option Expired
Note: The closing price of FXI was $40.54 on expiration Friday.
09/02/2010 Sold 11 FXI Sep2010 $42.00 Call Options @ $.20
Note: The price of FXI was $40.52 today when these options were sold.
09/17/2010 Sep2010 Options Expired
09/20/2010 Sell-to-Open (STO) 11 FXI Oct2010 $43.00 Call Options @ $.62
Note: The price of FXI was $42.19 today when these options were sold.
10/14/2010 Buy-to-Close (BTC) 11 FXI Oct2010 $43.00 Call Options @ $2.69
10/14/2010 Sell-to-Open (STO) 11 FXI Nov2010 $47.00 Call Options @ $.85
11/20/2010 Nov2010 Options Expired
Note: The closing price of FXI was $44.66 on expiration Friday.
12/01/2010 Sell-to-Open (STO) 11 FXI Jan2011 $47.00 Call Options @ $.63
Note: The price of FXI was $44.41 today when these options were sold.
12/20/2010 Income Distribution $186.11 = ($.16919 * 1100 shares)
01/22/2011 Jan2011 FXI options expired
Note: The price of FXI was $43.23 at closing on expiration Friday.
01/24/2011 Sold 3 FXI Feb2011 $44.00 Calls @ $.55
Note: The price of FXI was $43.04 when these options were sold.
02/19/2011 Feb2011 FXI options expired
02/28/2011 Sold 11 FXI Apr2011 $44.00 Calls @ $.67
Note: The price of FXI was $42.41 when these Call options were sold.
04/16/2011 Apr2011 FXI Options Expired.
Note: the price of FXI was $45.79 upon options expiration.
The overall performance results(including commissions) for the iShares MSCI China ETF (FXI) transactions was as follows:
Stock Purchase Cost: $46,043.95
= ($41.85*1,100+$8.95 commission)
Net Profit:
(a) Options Income: +$2,235.65
= (1,100*($.71+$.20+$.62-$2.69+$.85+$.63+$.55+$.67) + 700*$.73 + 400*$.40 - ($17.20*6 +$14.20 +$11.95) commissions)
(b) Distribution Income: +$186.11 = ($.16919 * 1100 shares)
(c) Capital Appreciation (FXI shares are assigned at $44.00): +$2,356.05
= ($44.00-$41.85)*1,100 - $8.95 commissions
Total Net Profit (FXI shares assigned at $44.00): +$4,777.81
= (+$2,235.65 +$186.11 +$2,356.05)
Absolute Return (FXI assigned at $44.00): +10.4%
= +$4,777.81/$46,043.95
Annualized Return: +12.7%
= (+$4,777.81/$46,043.95)*(365/299 days)
4. iShares MSCI Emerging Markets ETF (EEM) -- Closed
The transactions history is as follows:
10/27/2010 Bought 300 EEM @ $45.55
10/27/2010 Sold 3 EEM Nov2010 $46.00 Calls @ $.99
11/19/2010 Buy-to-Close (BTC) 3 EEM Nov2010 $46.00 Call Options @ $.38
11/19/2010 Sell-to-Open (STO) 3 EEM Dec2010 $47.00 Call Options @ $1.02
12/18/2010 Dec2010 Options Expired
Note: The price of EEM was $46.40 upon Dec2010 options expiration.
12/21/2010 Sold 3 EEM Jan2011 $47.00 Calls @ $.77
Note: The price of EEM was $46.43 when these options were sold.
12/21/2010 Distribution Income $107.83 = $.35942 * 300 shares
12/29/2010 Distribution Income $7.54 = $.02512 * 300 shares
01/22/2011 Jan2011 EEM options expired
Note: The price of EEM was $46.49 at closing on expiration Friday.
01/24/2011 Sold 3 EEM Feb2011 $47.00 Calls @ $.92
Note: The price of EEM was $46.65 when these options were sold.
02/19/2011 Feb2011 EEM options expired
02/28/2011 Sold 3 EEM Mar2011 $46.00 Calls @ $.79
Note: The price of EEM was $45.86 when these Call options were sold.
04/16/2011 Apr2011 EEM Options Expired.
Note: the price of EEM was $49.13 upon options expiration.
The overall performance results(including commissions) for the EEM transactions were as follows:
Stock Purchase Cost: $13,673.95
= ($45.55*300+$8.95 commission)
Net Profit:
(a) Options Income: +$1,177.00
= (300*($.99-$.38+$1.02+$.77+$.92+$.79) - 5*$11.20 commissions)
(b) Distribution Income: +$115.37 = $107.83 + $7.54
(c) Capital Appreciation (Stock assigned at $46.00): +$126.05
= ($46.00-$45.55)*300 - $8.95 commissions
Total Net Profit (EEM shares assigned at $47.00): +$1,418.42
= (+$1,177.00 +$115.37 +$126.05)
Absolute Return if Assigned at $46.00: +10.4%
= +$1,418.42/$13,673.95
Annualized Return If Assigned (ARIA): +22.1%
= (+$1,418.42/$13,673.95)*(365/171 days)
5. iShares MSCI South Korea ETF (EWY) -- Closed
The transactions history was as follows:
02/22/2011 Bought 300 EWY @ $58.03
02/22/2011 Sold 3 EWY Mar2011 $59.00 Calls @ $1.38
Note: these call options were sold with the price of EWY at $58.53
03/19/2011 Mar2011 Options Expired
03/21/2011 Sold 3 EWY Apr2011 $61.00 Calls @ $1.22
Note: price of EWY was $60.10 when these options were sold.
04/16/2011 Apr2011 EWY Options Expired.
Note: the price of EWY was $65.62 upon options expiration.
Two possible overall performance results(including commissions) for the EWY transactions would be as follows:
Stock Purchase Cost: $17,417.95
= ($58.03*300+$8.95 commission)
Net Profit:
(a) Options Income: +$757.60
= (300*($1.38+$1.22) - 2*$11.20 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (EWY shares assigned at $61.00): +$882.05
= ($61.00-$58.03)*300 - $8.95 commissions
Total Net Profit(EWY assigned at $61.00): +$1,639.65
= (+$757.60 +$0.00 +$882.05)
Absolute Return (EWY assigned at $61.00): +9.4%
= +$1,639.65/$17,417.95
Annualized Return: +64.8%
= (+$1,639.65/$17,417.95)*(365/53 days)
6. Sprint Nextel Corp.(S) -- Closed
The transactions history was as follows:
02/03/2011 Bought 1500 S @ $4.32
02/03/2011 Sold 15 S Feb2011 $4.50 Calls @ $.12
02/19/2011 Feb2011 S options expired
02/28/2011 Sold 15 S Apr2011 $4.50 Calls @ $.16
Note: The price of S was $4.37 when these Call options were sold.
04/16/2011 Apr2011 S Options Expired.
Note: the price of S was $4.81 upon options expiration.
The overall performance results(including commissions) for the Sprint Nextel Corp.(S) transactions was as follows:
Stock Purchase Cost: $6,488.95
= ($4.32*1500+$8.95 commission)
Net Profit:
(a) Options Income: +$379.60
= [1500*($.12+$.16) - 2*$20.20 commissions]
(b) Dividend Income: +$0.00
(c) Capital Appreciation (Sprint assigned at $4.50): +$261.05
= ($4.50-$4.32)*1500 - $8.95 commissions
Total Net Profit(Sprint stock assigned at $4.50): +$640.65
= (+$379.60 +$0.00 +$261.05)
Absolute Return (Stock Assigned at $4.50): +9.9%
= +$640.65/$6,488.95
Annualized Return: +50.1%
= (+$640.65/$6,488.95)*(365/72 days)
Thursday, April 14, 2011
Overall Market Meter Rating Remains "Slightly Bullish"
Each month during options 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. These nine factors can be categorized into macroeconomic (the first 3 indicators in the chart below), momentum (next 2 indicators in the chart), value (next 3 indicators), and growth (the last indicator). 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 4.22 is higher than the 3.89 of last month, but nevertheless 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 next options expiration month of May 2011.
As shown in the right sidebar, the covered calls investing strategy corresponding to this overall Slightly Bullish sentiment is to "on-average sell 2% out-of-the-money covered calls for the nearest expiration month." So with the April 2011 options expiration this week, newly established positions for May2011 expiration will be established in accordance with this guideline.
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 4.22 is higher than the 3.89 of last month, but nevertheless 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 next options expiration month of May 2011.
As shown in the right sidebar, the covered calls investing strategy corresponding to this overall Slightly Bullish sentiment is to "on-average sell 2% out-of-the-money covered calls for the nearest expiration month." So with the April 2011 options expiration this week, newly established positions for May2011 expiration will be established in accordance with this guideline.
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
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