The Covered Calls Advisor has established three new 100% cash-secured put positions. The stocks are Blackstone Group (Ticker Symbol BX), Hertz Global Holdings (Ticker Symbol HTZ), and Marathon Petroleum Corp. (Ticker Symbol MPC). The Covered Calls Advisor does not use margin, so the detailed information for these positions and some potential results shown below reflect the fact that this position was established using 100% cash securitization for the three Put option positions sold. These positions are:
1. Blackstone Group (BX)
The transaction is as follows:
8/5/2013 Sold 3 Sep2013 $22.00 Puts @ $.58
Note: The price of BX was $22.74 when this transaction was executed.
A possible overall performance results(including commissions) for this BX transaction would be as follows:
100% Cash-Secured Cost Basis: $6,600.00 = $22.00*300
Net Profit:
(a) Options Income: +$162.80
= ($.58*300 shares) - $11.20 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If BX remains above $22.00 at Sep2013 expiration): +$0.00
= ($22.00-$22.00)*300 shares
Total Net Profit (If BX is above $22.00 strike price at Sep2013 options expiration): +$162.80
= (+$162.80 +$0.00 +$0.00)
Absolute Return (If BX is above $22.00 at Sep2013 options expiration and Put options thus expire worthless): +2.5%
= +$162.80/$6,600.00
Annualized Return (If BX above $22.00 at expiration): +18.8%
= (+$162.80/$6,600.00)*(365/48 days)
The downside 'breakeven price' at expiration is at $21.42 ($22.00 - $.58). This is the price at which this 100% cash-secured Puts investment would make neither a profit or a loss.
The 'crossover price' at expiration is $23.32 ($22.74 + $.58). This is the price above which it would have been more profitable to simply buy-and-hold BX stock until Sep 20th (the Sep2013 options expiration date) rather than holding the short Put options.
2. Hertz Global Holdings (HTZ)
The transaction is as follows:
8/1/2013 Sold 7 Aug2013 $24.00 Puts @ $.45
Note: The price of HTZ was $24.56 when this transaction was executed.
A possible overall performance results(including commissions) for this HTZ transaction would be as follows:
100% Cash-Secured Cost Basis: $16,800.00 = $24.00*700
Net Profit:
(a) Options Income: +$300.80
= ($.45*700 shares) - $14.20 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If HTZ remains above $24.00 at Aug2013 expiration): +$0.00
= ($24.00-$24.00)*700 shares
Total Net Profit (If HTZ is above $24.00 strike price at Aug2013 options expiration): +$300.80 = (+$300.80 +$0.00 +$0.00)
Absolute Return (If HTZ is above $24.00 at Aug2013 options expiration and Put options thus expire worthless): +1.8%
= +$300.80/$16,800.00
Annualized Return (If HTZ above $24.00 at expiration): +38.4%
= (+$300.80/$16,800.00)*(365/17 days)
The downside 'breakeven price' at expiration is at $23.55 ($24.00 - $.45).
The 'crossover price' at expiration is $25.01 ($24.56 + $.45). This is the price above which it would have been more profitable to simply buy-and-hold HTZ until Aug 16th (the Aug2013 options expiration date) rather than holding the short Put options.
3. Marathon Petroleum Corp. (MPC)
The transaction is as follows:
8/5/2013 Sold 2 Aug2013 $70.00 Puts @ $1.25
Note: The price of MPC was $70.96 when this transaction was executed.
A possible overall performance results(including commissions) for this MPC transaction would be as follows:
100% Cash-Secured Cost Basis: $14,000.00 = $70.00*200
Note: the price of MPC was $70.96 when these Put options were sold.
Net Profit:
(a) Options Income: +$239.55
= ($1.25*200 shares) - $10.45 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If MPC remains above $70.00 at Aug2013 expiration): +$0.00
= ($70.00-$70.00)*200 shares
Total Net Profit (If MPC is above $70.00 strike price at Aug2013 options expiration): +$239.55
= (+$239.55 +$0.00 +$0.00)
Absolute Return (If MPC is above $70.00 at Aug2013 options expiration and Put options thus expire worthless): +1.7%
= +$239.55/$14,000.00
Annualized Return (If MPC above $70.00 at expiration): +48.0%
= (+$239.55/$14,000.00)*(365/13 days)
The downside 'breakeven price' at expiration is at $68.75 ($70.00 - $1.25).
The 'crossover price' at expiration is $72.21 ($70.96 + $1.25). This is the price above which it would have been more profitable to simply buy-and-hold MPC until Aug 16th (the Aug2013 options expiration date) rather than holding the short Put options.
