The covered calls position in Transocean Inc.(RIG) was established as a 'possible early assignment' position. A description of this position when it was established is here: "link".
Today is the ex-dividend date for Transocean. I was somewhat surprised that the stock was not assigned overnight since the stock was well in-the-money and there was only about $.16 [$4.55-($49.39-$45.00)] of time value remaining in the options at market close yesterday. The options owner could have received the $.79 ex-div payment if exercised. So, I was pleased to be able to capture the dividend payment and to sell the stock today with a +1.6% absolute return-on-investment in 8 days.
The transactions history was as follows:
02/14/2012 Bought 200 RIG @ $47.58
02/14/2012 Sold 2 RIG Mar2012 $45.00 Calls @ $3.50
02/22/2012 Ex-div date. Will receive $158.00 ($.79 * 200 shares) dividend payment.
02/22/2012 Bought-to-Close 2 RIG Mar2012 $45.00 Calls @ $4.70
02/22/2012 Sold 200 RIG @ $48.90
The overall performance result (including commissions) for the Transocean Inc.(RIG) transactions was as follows:
Stock Purchase Cost: $9,524.95
= ($47.58*200+$8.95 commission)
Net Profit:
(a) Options Income: -$260.90
= ($3.50-$4.70)*200 shares - 2*$10.45 commissions
(b) Dividend Income (Stock ex-div on 2/22/2012): +$158.00
= $.79 per share x 200 shares
(c) Capital Appreciation (Stock sold at $48.90): +$255.05
+($48.90-$47.58)*200 - $8.95 commissions
Total Net Profit: +$152.15
= (-$260.90 +$158.00 +$255.05)
Absolute Return: +1.6%
= +$152.15/$9,524.95
Annualized Return: +72.9%
= (+$152.15/$9,524.95)*(365/8 days)
