Today, two November 2013 call options were sold in Transocean Inc.(Symbol RIG) to re-establish the covered calls position. As shown below, the September 2014 covered call options expired and the new position today was established at the Nov2013 $47.00 strike price. The transactions to date and some potential return on investment results are detailed below.
Transocean Inc. (RIG) -- Continuation
08/08/2013 Bought 200 RIG shares @ $48.76
08/08/2013 Sold 2 RIG Sep2013 $48.00 Call Options @ $1.65
08/21/2013 Ex-dividend of $.56 per share
09/20/2013 2 RIG Sep2013 $48.00 Calls expired 10/17/2013
Sold 2 RIG Nov2013 $47.00 Call Options @ $.75
Note: the price of RIG was $45.82 when these options were sold
11/13/2013 Ex-dividend of $.56 per share
Two possible overall performance results (including commissions) for this Transocean Inc. (RIG) covered calls position are as follows:
Stock Purchase Cost: $9,760.95
= ($48.76*200+$8.95 commission)
Net Profit:
(a) Options Income: +$459.10
= ($1.65+$.75)*200 shares - 2*$10.45 commissions
(b) Dividend Income: +$224.00 = ($.56 x 2 dividend per share x 200 shares);
(c) Capital Appreciation (If stock price unchanged at current price of $45.82): -$596.95
= +($45.82-$48.76)*200 - $8.95 commissions; or
(c) Capital Appreciation (If stock assigned at $47.00 at Nov2013 expiration): -$360.95
= +($47.00-$48.76)*200 - $8.95 commissions
Total Net Profit (If stock price unchanged at current price of $45.82): =-+94.15
= (+$459.10 +$224.00 -$596.95);
or Total Net Profit (If stock assigned at $47.00 at Nov2013 expiration): +$322.15
= (+$459.10 +$224.00 -$360.95)
1. Absolute Return (If stock price unchanged at current price of $45.82): +1.0%
= +$94.15/$9,760.95
Annualized Return: +3.5%
= (+$94.15/$9,760.95)*(365/100 days); OR
2. Absolute Return (If stock assigned at $47.00 at Nov2013 expiration): +3.3%
= +$322.15/$9,760.95
Annualized Return: +12.0%
= (+$322.15/$9,760.95)*(365/100 days)
