Yesterday was options expiration Friday for August 2012. The following transactions were made in the Covered Calls Advisor Portfolio:
A. ROLLED-UP-AND-OUT
Three existing positions were rolled 'up' to a higher strike price and 'out' to a new expiration date as follows:
1. iShares MSCI China ETF (Ticker Symbol FXI)
08/17/2012 Bought-to-Close 10 FXI Aug2012 $34.00 Calls at $.42
Note: this was done with the price of FXI at $34.41, so the remaining time value in the Aug2012 option was only $.01
08/17/2012 Sold-to-Open 10 FXI August 24th, 2012 $34.50 call options at $.31
Note: this is a one-week option
The transactions history for this iShares MSCI China ETF (FXI) covered calls position is as follows:
07/30/2012 Bought 1,000 FXI shares @ $34.09 07/30/2012
Sold 10 FXI Aug2012 $34.00 Call Options @ $.80
08/17/2012 Bought-to-Close 10 FXI Aug2012 $34.00 Calls at $.42
08/17/2012 Sold-to-Open 10 FXI August 24th, 2012 $34.50 call options at $.31
Note: the price of FXI was $34.41 today when this roll-up-and-out transaction occurred.
Two possible overall performance results(including commissions) for this iShares MSCI China ETF (FXI) covered calls position is as follows:
Stock Purchase Cost: $34,098.95
= ($34.09*1,000+$8.95 commission)
Net Profit:
(a) Options Income: +$657.10
=($.80-$.42+$.31)*1,000 shares - 2*$16.45 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If FXI price unchanged at $34.41 upon 8/24/2012 expiration): +$311.05
=($34.41-$34.09)*1,000 - $8.95 commissions
(c) Capital Appreciation (If FXI assigned at $34.50 upon expiration): +$401.05
=($34.50-$34.09)*1,000 - $8.95 commissions
Total Net Profit(If FXI price unchanged at $34.41 at 8/24/2012 expiration): +$968.15
= (+$657.10 +$0.00 +$311.05)
Total Net Profit(If FXI assigned at $34.50 at 8/24/2012 expiration): +$1,058.15
= (+$657.10 +$0.00 +$401.05)
Absolute Return (If FXI price unchanged at $34.41 at 8/24/2012 expiration): +2.8%
= +$968.15/$34,098.95
Annualized Return (If price unchanged at $34.41 at 8/24/2012 expiration): +41.5%
= (+$968.15/$34,098.95)*(365/25 days)
Absolute Return (If FXI assigned at $34.50 at 8/24/2012 options expiration): +3.1%
= +$1,058.15/$34,098.95
Annualized Return (If stock assigned): +45.3%
= (+$1,058.15/$34,098.95)*(365/25 days)
2. iShares MSCI South Korea ETF (Ticker Symbol EWY)
08/17/2012 Bought-to-Close 5 EWY Aug2012 $56.00 Calls at $1.68
Note: this was done with the price of EWY at $57.67, so the remaining time value in the Aug2012 option was only $.01
08/17/2012 Sold-to-Open 5 EWY Sep2012 $57.00 call options at $2.03
The transactions history for this iShares MSCI South Korea ETF (EWY) covered calls position is as follows:
07/30/2012 Bought 500 EWY shares @ $54.51 08/01/2012
Sold 5 EWY Aug2012 $56.00 Call Options @ $1.40
Note: the price of EWY was $56.40 today when the options were sold.
08/17/2012 Bought-to-Close 5 EWY Aug2012 $56.00 Calls at $1.68
Note: this was done with the price of EWY at $57.67
08/17/2012 Sold-to-Open 5 EWY Sep2012 $57.00 call options at $2.03
A possible overall performance result (including commissions) is as follows:
Stock Purchase Cost: $27,263.95
= ($54.51*500+$8.95 commission)
Net Profit:
(a) Options Income: +$849.60
= ($1.40+$1.68-$2.03)*500 shares - 2*$12.70 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If EWY assigned at $57.00): +$1,236.05
= ($57.00-$54.51)*500 - $8.95 commissions
Total Net Profit(If EWY assigned at $57.00): +$2,085.65
= (+$849.60 +$0.00 +$1,236.05)
Absolute Return if Assigned at $57.00: +7.6%
= +$2,085.65/$27,263.95
Annualized Return If Assigned (ARIA): +51.7%
= (+$2,085.65/$27,263.95)*(365/54 days)
3. Mylan Inc.(Ticker Symbol MYL)
08/17/2012 Bought-to-Close 5 MYL Aug2012 $22.00 Calls at $1.53
Note: this was done with the price of EWY at $23.52, so the remaining time value in the Aug2012 option was only $.01
08/17/2012 Sold-to-Open 5 MYL Sep2012 $23.00 call options at $.88
The transactions history for this Mylan Inc.(MYL) covered calls position is as follows: 03/08/2012 Bought 500 Mylan Inc. Shares @ $22.51
03/08/2012 Sold 5 MYL Mar2012 $23.00 Calls @ $.26
Note: the price of Mylan was $22.75 today when the calls were sold.
03/18/2012 Mar2012 options expired.
03/19/2012 Sold 5 MYL Apr2012 $23.00 Calls @ $.47
Note: the price of MYL was $22.73 when these options were sold.
04/22/2012 MYL May2012 Call options expired.
04/25/2012 Sold 5 MYL May2012 $23.00 Calls at $.30
Note: the price of MYL was $22.20 when these call options were sold.
05/19/2012 MYL Jun2012 Call options expired.
06/04/2012 Sold 5 MYL Jun2012 $21.00 Calls at $.28
06/15/2012 Bought-to-Close 5 Jun2012 $21.00 call options at $.20
06/15/2012 Sold 5 MYL Jul2012 $22.00 call options at $.31
07/18/2012 Bought-to-Close 5 MYL Jul2012 $22.00 call options at $.60
07/18/2012 Sell-to-Open 5 MYL Aug2012 $22.00 call options at $.96
Note: the price of MYL was $22.57 when this credit spread roll-out transaction was made.
08/17/2012 Bought-to-Close 5 MYL Aug2012 $22.00 Calls at $1.53
Note: this was done with the price of EWY at $23.52
08/17/2012 Sold-to-Open 5 MYL Sep2012 $23.00 call options at $.88
A possible result from this position is as follows:
Stock Purchase Cost: $11,263.95
= ($22.51*500+$8.95 commission)
Net Profit:
(a) Options Income: +$486.60
= ($.26+$.47+$.30+$.28-$.20+$.31-$.60+$.96-$1.53+$.88)*500 shares) - 7*$11.20 commissions
(b) Dividend Income: $0.00
(c) Capital Appreciation (If stock price above $23.00 at Sep2012 options expiration): +$236.05
= ($23.00-$22.51)*500 - $8.95 commissions
Total Net Profit(If stock assigned at $23.00 at Sep2012 options expiration): +$722.65 = (+$486.60 +$0.00 +$236.05)
Absolute Return (If Mylan stock assigned at $23.00 at Sep2012 options expiration): +6.4%
= +$722.65/$11,263.95
Annualized Return (If stock assigned at $23.00 at Sep2012 expiration): +11.8%
= (+$722.65/$11,263.95)*(365/198 days)
B. ROLLED-OUT
Two existing positions were rolled 'out' to the Sep2012 options expiration date as follows:
1. Market Vectors Russia ETF (Ticker Symbol RSX)
08/17/2012 Bought-to-Close 6 RSX Aug2012 $27.00 Calls at $.85
Note: this was done with the price of RSX at $27.84, so the remaining time value in the Aug2012 option was only $.01
08/17/2012 Sold-to-Open 6 RSX Sep2012 $27.00 call options at $1.45
The transactions history for this Market Vectors Russia ETF (RSX) covered calls position is as follows:
07/30/2012 Bought 600 RSX shares @ $26.59
08/01/2012 Sold 6 RSX Aug2012 $27.00 Call Options @ $.55
Note: the price of RSX was $26.70 today when these options were sold.
08/17/2012 Bought-to-Close 6 RSX Aug2012 $27.00 Calls at $.85
Note: this was done with the price of RSX at $27.84
08/17/2012 Sold-to-Open 6 RSX Sep2012 $27.00 call options at $1.45
Note: the price of RSX was $27.88 when these Sep2012 call options were sold.
A possible overall performance result (including commissions) for this Market Vectors Russia ETF (RSX) covered calls position is as follows:
Stock Purchase Cost: $15,962.95
= ($26.59*600+$8.95 commission)
Net Profit:
(a) Options Income: +$663.10
= ($.55-$.85+$1.45)*600 shares - 2*$13.45 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If RSX assigned at $27.00): +$237.05
= ($27.00-$26.59)*600 - $8.95 commissions
Total Net Profit(If RSX assigned at $27.00): +$900.15
= (+$663.10 +$0.00 +$237.05)
Absolute Return if Assigned at $27.00: +5.6%
= +$900.15/$15,962.95
Annualized Return If Assigned (ARIA): +38.1%
= (+$900.15/$15,962.95)*(365/54 days)
2. Morgan Stanley (Ticker Symbol MS)
08/17/2012 Bought-to-Close 6 MS Aug2012 $14.00 Calls at $.58
Note: this was done with the price of MS at $14.57, so the remaining time value in the Aug2012 option was only $.01
08/17/2012 Sold-to-Open 6 MS Sep2012 $14.00 call options at $.96
The transactions history for this Morgan Stanley (MS) covered calls position is as follows:
07/31/2012 Bought 600 MS @ $13.63 07/31/2012
Sold 6 MS Aug2012 $14.00 Calls @ $.35
08/17/2012 Bought-to-Close 6 MS Aug2012 $14.00 Calls at $.58
Note: this was done with the price of MS at $14.57
08/17/2012 Sold-to-Open 6 MS Sep2012 $14.00 call options at $.96
A possible overall performance result (including commissions) for this Morgan Stanley covered calls position is as follows:
Stock Purchase Cost: $8,186.95
= ($13.63*600+$8.95 commission)
Net Profit:
(a) Options Income: +$411.10
= ($.35-$.58+$.96)*600 shares - 2*$13.45 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If MS assigned at $14.00): +$213.05
= ($14.00-$13.63)*600 - $8.95 commissions
Total Net Profit(If MS assigned at $14.00 at Sep2012 options expiration): +$624.15
= (+$411.10 +$0.00 +$213.05)
Absolute Return if Assigned at $14.00: +7.6%
= +$624.15/$8,186.95
Annualized Return If Assigned (ARIA): +52.5%
= (+$624.15/$8,186.95)*(365/53 days)
C. SHORT OPTIONS CLOSED OUT
The Aug2012 covered calls position in Bank of America Corp. was closed out. With Bank of America (Ticker Symbol BAC) trading at $8.01 with less than 15 minutes remaining in the trading day on options expiration Friday, the Aug2012 $7.00 calls were well in-the-money and there was no time value remaining in the options.
The transaction was as follows:
08/17/2012 Bought-to-Close 10 BAC Aug2012 $7.00 call options @ $1.01
Note: BAC was trading at $8.01 when this transaction occurred.
So currently, the Covered Calls Advisor Portfolio is long 1,000 shares of BAC stock. The Covered Calls Advisor intends to continue with this covered calls position and will most likely sell 10 Sep2012 $8.00 call options on Monday to re-establish a covered calls position. When this occurs, an update of this BAC position and potential return-on-investment results will be posted to this blog.
D. CLOSED POSITIONS
There are two positions in which the Aug2012 options expired. They were as follows:
1. General Motors Co. (Ticker Symbol GM)
The transaction history is as follows:
08/02/2012 Sold 7 General Motors Co.(GM) Aug2012 $19.00 Put Options @ $.32 Note: the price of GM was $19.50 today when these Puts were sold.
08/17/2012 GM Aug2012 Put Options expired.
Note: the price of GM was $22.01 upon options expiration.
The overall performance result(including commissions) for this General Motors Co. transaction was as follows:
100% Cash-Secured Cost Basis: $13,300.00
= $19.00*700
Net Profit:
(a) Options Income: +$209.80
= ($.32*700 shares) - $14.20 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (Since GM above $19.00 at Aug2012 expiration): +$0.00
= ($19.00-$19.00)*700
Total Net Profit (GM above $19.00 at Aug2012 options expiration): +$209.80
= (+$209.80 +$0.00 +$0.00)
Absolute Return (GM stock price remained above $19.00 at Aug2012 options expiration and Put options expired worthless): +1.6%
= +$209.80/$13,300.00
Annualized Return-on-Investment: +33.9%
= (+$209.80/$13,300.00)*(365/17 days)
2. Valero Energy Corp. (Ticker Symbol VLO)
The covered calls position in Valero was in-the-money and the Covered Calls Advisor decided to let the shares get called away at the $28.00 strike price. The transaction history for this Valero (VLO) position was as follows:
06/21/2012 Bought 300 VLO @ $22.82
06/21/2012 Sold 3 VLO Jul2012 $24.00 Calls @ $.46
07/17/2012 Bought-to-Close 3 VLO Jul2012 $24.00 Calls @ $1.50
07/17/2012 Sold-to-Open 3 VLO Aug2012 $24.00 Calls @ $1.95
08/03/2012 Bought-to-Close 3 VLO Aug2012 $24.00 Calls @ $4.00
08/03/2012 Sold-to-Open 3 VLO Aug2012 $28.00 Calls @ $.70
08/13/2012 Ex-dividend date at $.175 per share
08/17/2012 Aug2012 $28.00 options expired and 300 VLO shares assigned (called away)at $28.00
Note: the price of VLO stock was $28.80 upon options expiration.
The results from this position are as follows:
Stock Purchase Cost: $6,854.95
= ($22.82*300+$8.95 commission)
Net Profit:
(a) Options Income: -$761.80
= ($.46-$1.50+$1.95-$4.00+$.70)*300 shares) - 4*$11.20 commissions
(b) Dividend Income: $52.50
= $.175 * 300 shares
(c) Capital Appreciation (VLO stock price was above $28.00 at Aug2012 options expiration): +$1,545.05
=($28.00-$22.82)*300 - $8.95 commissions
Total Net Profit: +$835.75
= (-$761.80 +$52.50 +$1,545.05)
Absolute Return: +12.2%
= +$835.75/$6,854.95
Annualized Return: +76.7%
= (+$835.75/$6,854.95)*(365/58 days)
E. OPTIONS EXPIRED
The covered calls position in McDermott International Inc. (Ticker Symbol MDR) closed out-of-the-money upon Aug2012 options expiration. The transaction history is as follows:
08/01/2012 Bought 600 MDR @ $11.56
08/01/2012 Sold 6 MDR Aug2012 $12.00 Calls @ $.55
08/17/2012 MDR Aug2012 $12.00 Call Options expired.
Note: the price of MDR stock was $11.75 upon options expiration.
A decision will be made to either sell this MDR stock or to retain it and sell calls to establish a September 2012 covered call position. 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.
