Today, the Covered Calls Advisor established a new 100% Cash-Secured Puts position in Potash Corp of Saskatchewan Inc. (Ticker Symbol POT) with a Jul2013 expiration.
The transaction was as follows:
06/13/2013 Sold 3 Potash Corp of Saskatchewan Inc. (POT) Jul2013 $41.00 Put Options @ $1.85
Note: the price of POT was $40.11 today when these Puts were sold. The Covered Calls Advisor does not use margin, so the detailed information on this position and some potential results shown below reflect the fact that this position was established using 100% cash securitization for the three Put options sold.
A possible overall performance results (including commissions) for this POT transaction would be as follows:
100% Cash-Secured Cost Basis: $12,300.00 = $41.00*300
Net Profit:
(a) Options Income: +$543.80
= ($1.85*300 shares) - $11.20 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If POT unchanged at $40.11 at Jul2013 expiration): -$267.00
= ($40.11-$41.00)*300 shares
(c) Capital Appreciation (If POT above $41.00 at Jul2013 expiration): +$0.00
= ($41.00-$41.00)*300 shares
Total Net Profit (If POT is unchanged at $40.11 at Jul2013 options expiration): +$267.80
= (+$543.80 +$0.00 -$267.00)
Total Net Profit (If POT is above $41.00 strike price at Jul2013 options expiration): +$543.80 = (+$543.80 +$0.00 +$0.00)
1. Absolute Return (If POT unchanged at $40.11 at Jul2013 options expiration and Put options are exercised at $41.00): +2.3%
= +$267.80/$12,300.00
Annualized Return (If stock price unchanged at $40.11 at expiration and Put options thus expire worthless): +21.6%
= (+$267.80/$12,300.00)*(365/38 days); OR
2. Absolute Return (If POT above $41.00 at Jul2013 options expiration and Put options thus expire worthless): +4.4%
= +$543.80/$12,300.00
Annualized Return (If stock price above $41.00 at expiration): +42.5%
= (+$543.80/$12,300.00)*(365/38 days)
