Today is 4 days until May2013 options expiration. With Apple Inc. stock at $451.75, the May2013 $425.00 option was well in-the-money and the time value remaining in the option was only $.18 [$26.93 - ($451.75-$425.00)]. The Covered Calls Advisor wanted to retain a covered call position in Apple Inc., so a decision was made to roll-up-and-out to the AAPL Jun2013 $450.00 strike price. Details of this Apple Inc. covered call position to date are shown below.
Apple Inc. Covered Call -- Continuation
The transactions history to date is as follows:
3/5/2013 Bought 100 AAPL shares @ $421.77
3/5/2013 Sold 1 Apr2013 $430 call option @ $9.70
04/19/2013 Apr2013 AAPL options expired
04/29/2013 Sold 1 AAPL May2013 $425.00 call option @ $10.01
Note: the AAPL price was $426.80 when the option was sold.
05/09/2013 $305.00=($3.05*100 shares) ex-dividend date
05/14/2013 Bought-to-Close 1 AAPL May2013 $425.00 call option @ $26.93
Note: the AAPL price was $451.75 when this option close-out transaction was made
05/14/2013 Sold 1 AAPL Jun2013 $450.00 call option @ $16.05
Note: the AAPL price was $452.50 when this option was sold.
A possible overall performance result (including commissions) for this Apple Inc. (symbol AAPL) covered call is as follows:
Stock Purchase Cost: $42,185.95
= ($421.77*100+$8.95 commission)
Net Profit:
(a) Options Income: +$844.20
= 100*($9.70+$10.01-$26.93+$16.05) - 4*$9.70 commissions
(b) Dividend Income: +$305.00 ($3.05*100 shares) on May 9th ex-div date
(c) Capital Appreciation (If AAPL assigned at $450.00) = +$2,814.05
= ($450.00-$421.77)*100 - $8.95 commissions
Total Net Profit (If AAPL assigned at $450.00): +$3,963.25
= (+$844.20 +$305.00 +$2,814.05)
Absolute Return if Assigned (at $450.00): +9.4%
= +$3,963.25/$42,185.95
Annualized Return If Assigned (ARIA): +31.5%
= (+$3,963.25/$42,185.95)*(365/109 days)
