Upon Aug2011 options expiration, twelve covered calls positions in the Covered Calls Advisor Portfolio (CCAP) expired. Today, a decision was made to re-establish covered calls positions for three equities (General Motors Co., iShares MSCI China ETF, and iShares MSCI South Korea ETF) with Sep2011 expirations. The detailed transactions history for these positions as well as possible results for these investments are as follows:
1. General Motors Co.(GM) -- Continuation
The transactions history is as follows:
07/20/2011 Bought 300 GM @ $29.32
07/20/2011 Sold 3 GM Aug2011 $30.00 Calls @ $.79
Note: the price of GM was $29.45 when the call options were sold.
08/20/2011 Aug2011 GM options expired.
08/29/2011 Sold 3 GM Sept02,2011 $24.00 Calls @$.25
Note: The price of GM was $23.43 when these call options were sold.
Two possible overall performance results(including commissions) for the General Motors transactions are as follows:
Stock Purchase Cost: $8,804.95
= ($29.32*300+$8.95 commission)
Net Profit:
(a) Options Income: +$289.60
= ($.79+$.25)*300 shares - 2*$11.20 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If stock price unchanged at $23.43): -$1,775.95
= ($23.43-$29.32)*300 - $8.95 commissions
(c) Capital Appreciation (If GM above $24.00 at Sept02,2011 expiration): -$1,596.95
+($24.00-$29.32)*300 - $8.95 commissions
Total Net Profit(If stock price unchanged at $23.43): -$1,486.35
= (+$289.60 +$0.00 -$1,775.95)
Total Net Profit(If stock price above $24.00 at Sept02,2011 options expiration): -$1,307.35 = (+$289.60 +$0.00 -$1,596.95)
Absolute Return if Unchanged at $23.43: -16.9%
= -$1,486.35/$8,804.95
Annualized Return If Unchanged (ARIU): -140.0%
= (-$1,486.35/$8,804.95)*(365/44 days)
Absolute Return (If stock price above $24.00 at Sept02,2011 options expiration):
-14.8% = -$1,307.35/$8,804.95
Annualized Return (If stock price above $24.00 at expiration): -123.2%
= (-$1,307.35/$8,804.95)*(365/44 days)
2. iShares MSCI China ETF (FXI) -- Continuation
The transactions history is 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.
05/31/2011 Sold 10 FXI Jul2011 $47.00 Calls @ $.37
Note: The price of FXI was $45.18 when these call options were sold.
06/21/2011 FXI ETF distribution of $.68555 per share
07/16/2011 Jul2011 FXI options expired.
07/18/2011 Sold 10 FXI Aug2011 $42.00 Calls @$.71
08/20/2011 Aug2011 FXI options expired.
08/29/2011 Sold 10 FXI Sep2011 $39.00 Calls @$.51
Note: The price of FXI was $37.73 when these call options 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: +$2,029.20
= (1,000*($.49+$.37+$.71+$.51) - 4*$12.70 commissions)
(b) Distribution Income: $685.55 = $.68555 * 1,000 shares
(c) Capital Appreciation (If FXI price unchanged at $37.73 at expiration): -$7,078.95
= ($37.73-$44.80)*1,000 - $8.95 commissions
(c) Capital Appreciation (If FXI assigned at $39.00 at expiration): -$5,808.95
= ($39.00-$44.80)*1,000 - $8.95 commissions
Total Net Profit (If FXI price unchanged at $37.73 at expiration): -$4,364.20
= (+$2,029.20 +$685.55 -$7,078.95)
Total Net Profit (If FXI assigned at $39.00): -$3,094.20
= (+$2,029.20 +$685.55 -$5,808.95)
1. Absolute Return (If FXI unchanged at $37.73 at expiration): -9.7%
= -$4,364.20/$44,808.95
Annualized Return (If FXI unchanged at expiration): -23.4%
= (-$4,364.20/$44,808.95)*(365/152 days)
2. Absolute Return (If FXI assigned at $39.00 at expiration): -6.9%
= -$3,094.20/$44,808.95
Annualized Return If Assigned (ARIA): -16.6%
= (-$3,094.20/$44,808.95)*(365/152 days)
3. iShares MSCI South Korea ETF (EWY) -- Continuation
The transactions history is as follows:
07/18/2011 Bought 500 EWY @ $64.76
07/18/2011 Sold 5 EWY Aug2011 $66.00 Calls @ $1.45
Note: The price of EWY was $64.80 when the options were sold.
08/20/2011 Aug2011 EWY options expired.
08/29/2011 Sold 5 EWY Sep2011 $56.00 Calls @$1.36
Note: The price of EWY was $54.72 when these call options were sold.
Two possible overall performance results(including commissions) for the EWY transactions would be as follows:
Stock Purchase Cost: $32,388.95
= ($64.76*500+$8.95 commission)
Net Profit:
(a) Options Income: +$1,379.60
= (500*($1.45+$1.36) - 2*$12.70 commissions)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If equity price unchanged at $54.72):
-$5,028.95 = ($54.72-$64.76)*500 - $8.95 commissions
(c) Capital Appreciation (If assigned at $56.00): -$4,388.95
= ($56.00-$64.76)*500 - $8.95 commissions
Total Net Profit(If equity price unchanged at $54.72): -$3,649.35
= (+$1,379.60 +$0.00 -$5,028.95)
Total Net Profit(If ETF price assigned at $56.00): -$3,009.35
= (+$1,379.60 +$0.00 -$4,388.95)
Absolute Return if Unchanged at $54.72: -11.3%
= -$3,649.35/$32,388.95
Annualized Return If Unchanged (ARIU) -67.4%
= (-$3,649.35/$32,388.95)*(365/61 days)
Absolute Return if Assigned at $56.00: -9.3%
= -$3,009.35/$32,388.95
Annualized Return If Assigned (ARIA) -55.6%
= (-$3,009.35/$32,388.95)*(365/61 days)
