Today, two new covered calls position were established in Hertz Global Holdings Inc. (Ticker Symbol HTZ) and Potash Corp of Saskatchewan Inc. (Ticker Symbol POT). The HTZ position was established at the $24.00 strike price and with a Sep2013 expiration while the POT position was at the $28.00 strike price and with an Aug2013 expiration. The details are as follows:
1. Hertz Global Holdings (HTZ)
The transactions were as follows:
08/06/2013 Bought 700 HTZ shares @ $24.50
08/06/2013 Sold 7 HTZ Sep2013 $24.00 Call Options @ $1.50
A possible overall performance result (including commissions) for these Hertz covered calls is as follows:
Stock Purchase Cost: $17,158.95
= ($24.50*700+$8.95 commission)
Net Profit:
(a) Options Income: +$1,035.80
= 700*$1.50 - $14.20 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If HTZ assigned at $24.00) = -$358.95
= ($24.00-$24.50)*700 - $8.95 commissions
Total Net Profit (If HTZ assigned at $24.00): +$676.85
= (+$1,035.80 +$0.00 -$358.95)
Absolute Return if Assigned (at $24.00): +3.9%
= +$676.85/$17,158.95
Annualized Return If Assigned (ARIA): +30.6%
= (+$676.85/$17,158.95)*(365/47 days)
2. Potash Corp of Saskatchewan Inc. (POT)
The transactions were as follows:
08/06/2013 Bought 300 POT shares @ $28.80
08/06/2013 Sold 3 POT Aug2013 $28.00 Call Options @ $1.33
Note: the price of POT was $28.82 when the options were sold.
A possible overall performance result (including commissions) for these Potash (POT) covered calls is as follows:
Stock Purchase Cost: $8,648.95
= ($28.80*300+$8.95 commission)
Net Profit:
(a) Options Income: +$387.80
= 300*$1.33 - $11.20 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If POT assigned at $28.00) = -$248.95
= ($28.00-$28.80)*300 - $8.95 commissions
Total Net Profit (If POT assigned at $28.00): +$138.85
= (+$387.80 +$0.00 -$248.95)
Absolute Return if Assigned (at $28.00): +1.6%
= +$138.85/$8,648.95
Annualized Return If Assigned (ARIA): +48.8%
= (+$138.85/$8,648.95)*(365/12 days)
