The Covered Calls Advisor Portfolio (CCAP) contained three covered calls positions with February 2013 expirations. A summary of the results is as follows:
- Two positions (Apple Inc. and Teva Pharmaceutical Industries Ltd) had their options exercised this past expiration Friday since the stock prices closed above the Feb2013 options' strike prices. The associated equities were assigned (i.e. equities called away) at their respective strike prices.
The annualized return-on-investment financial results for these two closed positions are:
Apple Inc. = +55.8%
Teva Pharmaceuticals = +27.1%
The detailed transactions history and results for these closed positions are provided below.
- For the other position which was in iShares MSCI China ETF (ticker symbol FXI), the equity closed at $40.32, which was below the $41.00 strike price. Therefore, the options expired worthless and the 1,000 shares of FXI were retained. A decision will be made to either sell the remaining 1,000 FXI shares or to sell 10 March 2013 options to re-establish a covered calls position against the FXI shares currently held.
The history and results for the two positions closed out upon their Feb2013 expiration are:
1. Apple Inc. (AAPL) -- Closed
The transactions history was as follows:
1/25/2013 Bought 100 AAPL shares @ $453.86
1/25/2013 Sold 1 AAPL Feb2013 $455.00 Call Option @ $12.35
Note: the price of AAPL was $454.35 when the option was sold.
2/15/2013 100 AAPL shares assigned at $455.00 strike price
Note: the closing price of AAPL on expiration Friday was $460.16
The overall performance result (including commissions) for this Apple Inc. covered call was as follows:
Stock Purchase Cost: $45,394.95
= ($453.86*100+$8.95 commission)
Net Profit:
(a) Options Income: +$1,225.30
= 100*$12.35 - $9.70 commissions
(b) Dividend Income: +$265.00 ($2.65 * 100 shares) Ex-div on Feb 11th
(c) Capital Appreciation (If AAPL assigned at $455.00) = +$105.05
= ($455.00-$453.86)*100 - $8.95 commissions
Total Net Profit (AAPL stock assigned at $455.00): +$1,595.35
= (+$1,225.30 +$265.00 +$105.05)
Absolute Return: +3.5%
= +$1,595.35/$45,394.95
Annualized Return: +55.8%
= (+$1,595.35/$45,394.95)*(365/23 days)
2. Teva Pharmaceutical Industries Ltd (TEVA) -- Closed
The transactions were as follows:
1/23/2013 Bought 300 TEVA shares @ $37.566
1/23/2013 Sold 3 TEVA Feb2013 $37.50 Call Options @ $.83
2/15/2013 100 TEVA shares assigned at $37.50 strike price
Note: the closing price of TEVA on expiration Friday was $38.34
A possible overall performance result (including commissions) for this Teva Pharmaceutical Industries Ltd covered calls position is as follows: Stock Purchase Cost: $11,278.75
= ($37.566*300+$8.95 commission)
Net Profit:
(a) Options Income: +$237.80
= 300*$.83 - $11.20 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (TEVA assigned at $37.50): -$28.75
= ($37.50-$37.566)*300 - $8.95 commissions
Total Net Profit (TEVA assigned at $37.50): +$209.05
= (+$237.80 +$0.00 -$28.75)
Absolute Return: +1.9%
= +$209.05/$11,278.75
Annualized Return: +27.1%
= (+$209.05/$11,278.75)*(365/25 days)
