The Covered Calls Advisor Portfolio (CCAP) contained a total of twelve covered calls positions with May 2011 expirations, with the following results:
- One covered calls position (International Paper) was exercised early at a nice profit. That occurrence was reported on the day it occurred here.
- Nine covered calls positions in the CCAP (Apple Inc., China Mobile Ltd., Freeport McMoRan Copper and Gold Inc., iShares MSCI China ETF, iShares MSCI Emerging Markets ETF, iShares MSCI South Korea ETF, Microsoft Corp., Petrobras, and ProShares UltraShort 20+ Year Treasury ETF) ended out-of-the-money. Decisions will be made to either sell the equities, or to keep them and sell calls to establish June2011 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 remaining two covered calls positions (Best Buy Corp. and UnitedHealth Group Inc.) were in-the-money on option expiration Friday. The Covered Calls Advisor decided to retain both stocks, so both positions were rolled-out to June 2011 covered calls. The transactions history for each of these positions are as follows:
1. Best Buy Corp.(BBY)
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.
05/20/2011 Bought-to-Close(BTC) 3 BBY May3011 $31.00 Calls @ $.36
Note: The price of BBY was $31.31 when the options were bought back.
05/20/2011 Sell-to-Open(STO) 3 BBY Jun2011 $32.00 Calls @ $.94
Note: The price of BBY was $31.43 when these 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: +$616.00
= (300*($.57+$.49+$.60-$.36+$.94) - 5*$11.20 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock price unchanged at $31.43):
-$1,118.95 = ($31.43-$35.13)*300 - $8.95 commissions
(c) Capital Appreciation (If assigned at $32.00): -$947.95
= ($32.00-$35.13)*300 - $8.95 commissions
Total Net Profit(If stock price unchanged at $31.43): -$502.95
= (+$616.00 +$0.00 -$1,118.95)
Total Net Profit(If stock assigned at $32.00): -$331.95
= (+$616.00 +$0.00 -$947.95)
1. Absolute Return if Unchanged at $31.43: -4.8%
= -$502.95/$10,547.95
Annualized Return If Unchanged (ARIU): -12.0%
= (-$502.95/$10,547.95)*(365/145 days)
2. Absolute Return if Assigned at $32.00: -3.1%
= -$331.95/$10,547.95
Annualized Return If Assigned (ARIA): -7.9%
= (-$331.95/$10,547.95)*(365/145 days)
2. UnitedHealth Group Inc.(UNH)
The transactions history is 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.
05/20/2011 Bought-to-Close(BTC) 3 UNH May3011 $45.00 Calls @ $5.05
Note: The price of UNH was $50.08 when the options were bought back.
05/20/2011 Sell-to-Open(STO) 3 UNH Jun2011 $50.00 Calls @ $1.43
Note: The price of UNH was $50.28 when these options were sold.
A possible overall performance result(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: -$810.60
= (300*($1.03-$5.05+$1.43) - 3*$11.20 commissions)
(b) Dividend Income: $0.00
(c) Capital Appreciation (If stock assigned at $50.00): +$1,800.05
= ($50.00-$43.97)*300 - $8.95 commissions
Total Net Profit (If stock assigned at $50.00): +$989.45
= (-$810.60 +$0.00 +$1,800.05)
Absolute Return (If stock assigned at $50.00 at expiration): +7.5%
= +$989.45/$13,199.95
Annualized Return If Assigned (ARIA): +44.9%
= (+$989.45/$13,199.95)*(365/61 days)
