- Three of the five positions (Foot Locker Inc., Marathon Petroleum Corp, and PulteGroup Inc.) were closed out at expiration. This was the optimal result for these three positions in that the maximum potential return-on-investment (ROI) results from when the positions were established were actually achieved. The annualized ROIs for these three closed positions are:
Foot Locker Inc. = +2.5% absolute return (equivalent to +25.4% annualized return for the 37 day holding period)
Marathon Petroleum Corp. = +2.9% absolute return (equivalent to +14.0% annualized return for the 75 day holding period)
PulteGroup Inc. = +3.7% absolute return (equivalent to +22.4% annualized return for the 61 day holding period)
The detailed transactions history and results for each of the three closed positions is detailed below. The cash available from the closing of these positions will be retained in the Covered Calls Advisor Portfolio until new covered calls and/or 100% cash-secured puts positions are established (most likely in the next week or two). These transactions will be posted on this blog the same day they occur.
- Two of the five positions ended at expiration with long stock positions (Noble Corp and ProShares UltraShort 20+ Year Treasury ETF). The seven ProShares UltraShort 20+ Year Treasury ETF 100% cash-secured Puts were assigned at their $74.00 strike price since TBT closed at Oct2013 options expiration last Friday at $73.78, slightly below the $74.00 strike price. The covered calls position in Noble Corp had its options expire since the stock price closed Friday at $37.98, also slightly below the Oct2013 options' $38.00 strike price. So, the Covered Calls Advisor Portfolio (CCAP) now owns 700 long shares in ProShares UltraShort 20+ Year Treasury ETF and 300 long shares in Noble Corp A decision will be made early this week to either sell these shares or to continue with covered calls positions by selling Nov2013 call options against the current long stock holdings. When these decisions are made and the accompanying transactions are completed, a post will be made on this blog on the same day with the transaction details.
Details of the transactions and associated return-on-investment results for the three closed positions are as follows:
1. Foot Locker Inc.(FL) -- Closed
The transactions were as follows:
09/13/2013 Bought 300 FL shares @ $32.67
09/13/2013 Sold 3 FL Oct2013 $32.00 Call Options @ $1.35
Note: Oct2013 options expiration is 10/18/2013 and next FL ex-dividend of $.20 per share is on 10/16/2013.
10/16/2013 Ex-dividend = $60.00 ($.20/share * 300 shares)
10/18/2013 FL Oct2013 options exercised and stock sold at $32.00 per share strike price
Note: the price of FL stock was $33.80 upon Oct2012 options expiration.
The overall return-on-investment performance result for this Foot Locker covered calls position was as follows:
Stock Purchase Cost: $9,809.95
= ($32.67*300+$8.95 commission)10/18/2013 FL Oct2013 options exercised and stock sold at $32.00 per share strike price
Note: the price of FL stock was $33.80 upon Oct2012 options expiration.
The overall return-on-investment performance result for this Foot Locker covered calls position was as follows:
Stock Purchase Cost: $9,809.95
Net Profit:
(a) Options Income: +$393.80
= ($1.35*300 shares) - $11.20 commissions
(b) Dividend Income (Stock assigned at Oct2013 expiration): +$60.00
= ($.20 dividend per share x 300 shares)
(c) Capital Appreciation: -$209.95
+($32.00-$32.67)*300 - $8.95 commissions
Total Net Profit (Stock assigned at $32.00 at Oct2013 expiration): +$243.85
+($32.00-$32.67)*300 - $8.95 commissions
Total Net Profit (Stock assigned at $32.00 at Oct2013 expiration): +$243.85
= (+$393.80 +$60.00 -$209.95)
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.
8/17/2013 MPC Puts assigned; so purchased 200 MPC shares @ $70.00 per share
8/19/2013 Ex-dividend = $84.00 ($.42 per share * 200 shares)
8/19/2013 Sold 2 MPC Sep2013 $67.50 Calls @ $2.10
9/23/2013 MPC options expired
9/26/2013 Sold 2 MPC Oct2013 $67.50 Calls @ $.90
10/18/2013 MPC options exercised and stock sold at $67.50 strike price
Note: price of MPC was $70.74 at Oct2013 expiration
The performance result (including commissions) for this MPC covered calls position was 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: +$818.65
= ($1.25+$2.10+$.90)*200 shares) - 3*$10.45 commissions
(b) Dividend Income: +$84.00 ($.42 * 200 shares)
(c) Capital Appreciation: -$500.00
= ($67.50-$70.00)*200 shares
Total Net Profit: +$402.65
= (+$818.65 +$84.00 -$500.00)
Absolute Return: +2.9%
= +$402.65/$14,000.00
Annualized Return on Investment (AROI): +14.0%
= (+$402.65/$14,000.00)*(365/75 days)
3. PulteGroup Inc. -- Closed
The transactions were as follows:
08/20/2013 Bought 300 PHM shares @ $16.08
08/20/2013 Sold 3 PHM Oct2013 $15.00 Call Options @ $1.75
10/18/2013 PHM options exercised and stock sold at $15.00 strike price.
Note: the price of PHM was $16.58 at expiration.
The overall performance result (including commissions) for these Pulte covered calls was as follows:
Stock Purchase Cost: $4,832.95
= ($16.08*300+$8.95 commission)
Net Profit:
(a) Options Income: +$513.80
= 300*$1.75 - $11.20 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation = -$332.95
= ($15.00-$16.08)*300 - $8.95 commissions
Total Net Profit: +$180.85
= (+$513.80 +$0.00 -$332.95)
Absolute Return: +3.7%
= +$180.85/$4,832.95
Annualized Return: +22.4%
= (+$180.85/$4,832.95)*(365/61 days)
Absolute Return: +2.49%
= +$243.85/$9,809.95
Annualized Return: +24.5%
2. Marathon Petroleum Corp. -- Closed = +$243.85/$9,809.95
Annualized Return: +24.5%
= (+$243.85/$9,809.95)*(365/37 days)
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.
8/17/2013 MPC Puts assigned; so purchased 200 MPC shares @ $70.00 per share
8/19/2013 Ex-dividend = $84.00 ($.42 per share * 200 shares)
8/19/2013 Sold 2 MPC Sep2013 $67.50 Calls @ $2.10
9/23/2013 MPC options expired
9/26/2013 Sold 2 MPC Oct2013 $67.50 Calls @ $.90
10/18/2013 MPC options exercised and stock sold at $67.50 strike price
Note: price of MPC was $70.74 at Oct2013 expiration
The performance result (including commissions) for this MPC covered calls position was 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: +$818.65
= ($1.25+$2.10+$.90)*200 shares) - 3*$10.45 commissions
(b) Dividend Income: +$84.00 ($.42 * 200 shares)
(c) Capital Appreciation: -$500.00
= ($67.50-$70.00)*200 shares
Total Net Profit: +$402.65
= (+$818.65 +$84.00 -$500.00)
Absolute Return: +2.9%
= +$402.65/$14,000.00
Annualized Return on Investment (AROI): +14.0%
= (+$402.65/$14,000.00)*(365/75 days)
3. PulteGroup Inc. -- Closed
The transactions were as follows:
08/20/2013 Bought 300 PHM shares @ $16.08
08/20/2013 Sold 3 PHM Oct2013 $15.00 Call Options @ $1.75
10/18/2013 PHM options exercised and stock sold at $15.00 strike price.
Note: the price of PHM was $16.58 at expiration.
The overall performance result (including commissions) for these Pulte covered calls was as follows:
Stock Purchase Cost: $4,832.95
= ($16.08*300+$8.95 commission)
Net Profit:
(a) Options Income: +$513.80
= 300*$1.75 - $11.20 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation = -$332.95
= ($15.00-$16.08)*300 - $8.95 commissions
Total Net Profit: +$180.85
= (+$513.80 +$0.00 -$332.95)
Absolute Return: +3.7%
= +$180.85/$4,832.95
Annualized Return: +22.4%
= (+$180.85/$4,832.95)*(365/61 days)
