Established a 100% Cash-Secured Puts Position in Citigroup Inc.

Today, the Covered Calls Advisor established a 100% Cash-Secured Puts position in Citigroup Inc. (Ticker Symbol C) with a Mar2014 expiration and at the $48.00 strike price.  As detailed below, this investment will provide a +1.9% absolute return in 20 days (which is equivalent to a +26.8% annualized return) if Citi stock closes at or above $48.00 at options expiration on Mar 21st.

Details of this transaction along with a potential return-on-investment result are: 

Citigroup Inc. (C)
The transaction is as follows:
02/25/2013 Sold 6 Mar2014 $48.00 Puts @ $.94
Note: The price of Citigroup was $48.46 when this transaction was executed.

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 six Put options sold.

A possible overall performance result (including commissions) for this Citigroup Inc. transaction would be as follows:
100% Cash-Secured Cost Basis: $28,800.00 = $48.00*600
Note:  the price of Citigroup was $48.46 when these Put options were sold.

Net Profit:
(a) Options Income: +$550.55
= ($.94*600 shares) - $13.45 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If C remains above $48.00 at Mar2014 expiration): +$0.00
= ($48.00-$48.00)*600 shares

Total Net Profit (If C is above $48.00 strike price at Mar2014 options expiration):+$550.55 
= (+$550.55 +$0.00 +$0.00)

Absolute Return (If C is above $48.00 at Mar2014 options expiration and Put options thus expire worthless): +1.9%
= +$550.55/$28,800.00
Annualized Return (If C above $48.00 at expiration): +26.8%
= (+$550.55/$28,800.00)*(365/26 days)

The downside 'breakeven price' at expiration is at $47.06 ($48.00 - $.94), which is 2.9% below the current market price of $48.46.
The 'crossover price' at expiration is $48.94 ($48.00 + $.94).  This is the price above which it would have been more profitable to simply buy-and-hold Citigroup stock until Mar 21st (the Mar2014 options expiration date) rather than holding these short Put options.

Continuation -- Agnico Eagle Ltd Covered Calls

Today, a covered calls position was established at the $35.00 strike price by selling 6 Mar2014 $35.00 call options against the 600 long shares in Agnico Eagle Mines Ltd (symbol AEM).

As detailed below, this investment will result in an overall +30.1% absolute return in 141 days (which is equivalent to a +78.0% annualized return) if the stock closes at $34.05 upon the March 21st options expiration -- which is the price of AEM when the Mar2014 call options were sold.

The details of the associated transactions and two potential return-on-investment results are as follows:

1. Agnico Eagle Mines Ltd (AEM) -- Covered Calls Continuation
10/31/2013 Bought 600 AEM shares @ $29.086
10/31/2013 Sold 6 AEM Dec2013 $27.50 Call Options @ $2.72
Note: the price of AEM was $29.20 today when these options were sold.
11/27/2013 Ex-dividend of $.22 per share
12/20/2013 Dec2013 AEM Call Options expired
01/20/2014 600 long shares of AEM @ $29.36
2/25/2014 Sold 6 AEM Mar2014 $35.00 Call Options @ $.92
Note: the price of AEM was $34.05 when these options were sold.
Some possible overall performance results (including commissions) for this Agnico Eagle(AEM) covered calls position are:
Stock Purchase Cost: $17,460.55
= ($29.086*600+$8.95 commission)

Net Profit:
(a) Options Income: +$2,157.10
= ($2.72+$.92)*600 shares) - 2*$13.45 commissions
(b) Dividend Income: +$132.00 = ($.22 dividend per share x 600 shares)
(c) Capital Appreciation (If stock price unchanged at expiration at $34.05): +$2,969.45
= +($34.05-$29.086)*600 - $8.95 commission; OR
(c) Capital Appreciation (If stock assigned at $35.00 strike price): +$3,539.45
= +($35.00-$29.086)*600 - $8.95 commission

Two possible net profit outcomes:
Total Net Profit (If stock price unchanged at Mar2014 expiration): +$5,258.55
= (+$2,157.10 +$132.00 +$2,969.45); OR
Total Net Profit (If stock assigned at $35.00 strike price): +$5,828.55
=+($2,157.10+$132.00+$3,539.45)

Two possible return-on-investment outcomes:
1. Absolute Return (If stock price unchanged at $34.05): +30.1%
= +$5,258.55/$17,460.55
Annualized Return (If stock price unchanged at expiration): +78.0%
= (+$5,258.55/$17,460.55)*(365/141); OR
2. Absolute Return (If stock assigned at $35.00 strike price at expiration): +33.4%
= +$5,828.55/$17,460.55
Annualized Return (If stock assigned at $35.00 strike price): +86.4%
= +($5,828.55/$17,460.55)*(365/141)

Continuation -- Noble Corp. Covered Calls

Today, a covered calls position was established at the $31.00 strike price by selling 3 Mar2014 $31.00 call options against the 300 long shares in Noble Corporation (symbol NE).

As detailed below, this investment will result in an overall -8.4% absolute return in 137 days (which is equivalent to a -22.3% annualized return) if the stock closes at or above $31.00 at options expiration on March 21st.

The details of the associated transactions and a potential return-on-investment result are as follows:

1. Noble Corporation (NE) -- Covered Calls Position
The transactions are as follows:
11/04/2013 Sold 3 Dec2013 $37.00 Noble Corp 100% Cash-Secured Put Options @ $1.24
Note: the price of NE was $37.32 when these options were sold
12/20/2013 Purchased 300 NE shares assigned at $37.00 strike price
Note: the price of NE was $36.32 at Dec2013 options expiration
12/31/2013 Sold 3 Jan2014 $37.00 Noble Corp Call Options @ $.80
Note: the price of NE was $36.97 when these options were sold
1/17/2014 Jan2014 $37.00 Noble Corp call options expired
Note: price of NE was $35.39 when these options expired
2/25/2014 Sold 3 Mar2014 $31.00 Noble Corp call options @ $1.00
Note: price of NE was $31.33 when these options were sold

The overall performance result (to-date including commissions) for these Noble Corp covered calls is as follows:
Stock Purchase Cost: $11,108.95
= ($37.00*300+$8.95 commission)

Net Profit:
(a) Options Income: +$878.40
= 300*($1.24+$.80+$1.00) - 3*$11.20 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (if assigned at $31.00) = -$1,808.95
= ($31.00-$37.00)*300 - $8.95 commissions

Total Net Profit (if assigned at Mar2014 expiration): -$930.55
= (+$878.40 +$0.00 -$1,808.95)

Absolute Return (if assigned): -8.4%
= -$930.55/$11,108.95
Annualized Return (if assigned at $31.00 at Mar2014 expiration): -22.3%
= (-$930.55/$11,108.95)*(365/137 days)

February 2014 Expiration Results

The Covered Calls Advisor held only one short options position through the February 2014 options expiration.  The result of this position in Citigroup Inc. was an absolute return of +2.3% which is equivalent to a 42.4% annualized return-on-investment for the 20 days that the position was held.   Additional positions will be established this week (including for the two existing long stock positions in Agnico Eagle Mines and Noble Corporation) and will be posted on this blog on the same day the transactions occur.

1. Citigroup Inc. (C)
The transaction was as follows:
02/03/2013 Sold 7 Feb2014 $46.00 Puts @ $1.09
Note: The price of Citigroup was $46.27 when this transaction was executed.
02/21/2014 7 Citigroup short Puts expired.
Note: the price of Citi was $48.26 upon options expiration last Friday.


The Covered Calls Advisor does not use margin, so the detailed information on this position and the results shown below reflect the fact that this position was established using 100% cash securitization for the seven Put options sold.

The overall performance result (including commissions) for this Citigroup Inc. transaction was:
100% Cash-Secured Cost Basis: $32,200.00 = $46.00*700
Note:  the price of Citigroup was $46.27 when these Put options were sold.

Net Profit:
(a) Options Income: +$748.80
= ($1.09*700 shares) - $14.20 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (C remained above $46.00 at Feb2014 expiration): +$0.00
= ($46.00-$46.00)*700 shares

Total Net Profit (C short Put options expired at Feb2014 options expiration):+$748.80 
= (+$748.80 +$0.00 +$0.00)

Absolute Return: +2.3%
= +$748.80/$32,200.00
Annualized Return: +42.4%
= (+$748.80/$32,200.00)*(365/20 days)

Established a 100% Cash-Secured Puts Position in Citigroup Inc.

Today, the Covered Calls Advisor established a 100% Cash-Secured Puts position in Citigroup Inc. (Ticker Symbol C) with a Feb2014 expiration and at the $46.00 strike price.  As detailed below, this investment will provide a +2.3% absolute return in 20 days (which is equivalent to a +42.4% annualized return) if Citi stock closes at or above $46.00 at options expiration on Feb 21st.

Details of this transaction along with a potential return-on-investment result are: 

Citigroup Inc. (C)
The transaction is as follows:
02/03/2013 Sold 7 Feb2014 $46.00 Puts @ $1.09
Note: The price of Citigroup was $46.27 when this transaction was executed.

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 seven Put options sold.

A possible overall performance result (including commissions) for this Citigroup Inc. transaction would be as follows:
100% Cash-Secured Cost Basis: $32,200.00 = $46.00*700
Note:  the price of Citigroup was $46.27 when these Put options were sold.

Net Profit:
(a) Options Income: +$748.80
= ($1.09*700 shares) - $14.20 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If C remains above $46.00 at Feb2014 expiration): +$0.00
= ($46.00-$46.00)*700 shares

Total Net Profit (If C is above $46.00 strike price at Feb2014 options expiration):+$748.80 
= (+$748.80 +$0.00 +$0.00)

Absolute Return (If C is above $46.00 at Feb2014 options expiration and Put options thus expire worthless): +2.3%
= +$748.80/$32,200.00
Annualized Return (If C above $46.00 at expiration): +42.4%
= (+$748.80/$32,200.00)*(365/20 days)

The downside 'breakeven price' at expiration is at $44.91 ($46.00 - $1.09), which is 2.9% below the current market price of $46.27.
The 'crossover price' at expiration is $47.09 ($46.00 + $1.09).  This is the price above which it would have been more profitable to simply buy-and-hold Citigroup stock until Feb 21st (the Feb2014 options expiration date) rather than holding these short Put options.