- Four of the five positions (Ensco PLC Class A, Fusion-io Inc., HollyFrontier Corp., and Southwest Airlines) were closed out at expiration. This was the optimal result for these positions in that the maximum potential return-on-investment (ROI) results were actually achieved from when the June positions were established. The annualized ROIs for these four closed positions are:
Ensco PLC Class A = +3.3% absolute return (equivalent to +33.0% annualized return for the 37 day holding period)
Fusion-io Inc. = +11.8% absolute return (equivalent to +79.8% annualized return for the 54 day holding period)
HollyFrontier Corp. = +1.2% absolute return (equivalent to +14.4% annualized return for the 30 day holding period)
Southwest Airlines = +2.8% absolute return (equivalent to +22.6% annualized return for the 46 day holding period)
The detailed transactions history and results for each of these four 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.
- One of the five positions (Citigroup Inc.) ended at expiration with the price of the stock at $47.34 which was below the $48.00 strike price. So the seven Citigroup call options expired and the 700 long shares of Citigroup were retained in the Covered Calls Advisor Portfolio. A decision will be made early this week to either sell these shares or to establish a covered calls position by selling July2014 call options against the current long stock holdings. When this decision is made and the accompanying transaction is completed, a post will be made on this blog on the same day with the Citigroup-related transactions details to-date.
Details of the four closed transactions and their associated return-on-investment results are as follows:
1. Ensco PLC Class A (ESV) -- Closed
The transaction was as follows:
05/16/2014 Sold 4 Jun2014 $50.00 Puts @ $1.70
Note: The price of Ensco was $49.82 when this transaction was executed.
06/20/2014 ESV Jun2014 Puts expired
Note: the price of ESV was $55.08 at the Jun2014 options expiration
The Covered Calls Advisor does not use margin, so the detailed information on this position and results shown below reflect the fact that this position was established using 100% cash securitization for the four Put options sold.
The overall performance result (including commissions) for this Ensco transaction was as follows:
100% Cash-Secured Cost Basis: $20,000.00
= $50.00*400
Note: the price of Ensco was $49.82 when these Put options were sold.
Net Profit:
(a) Options Income: +$668.05
= ($1.70*400 shares) - $11.95 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation: +$0.00
= ($50.00-$50.00)*400 shares
Total Net Profit:+$668.05
= (+$668.05 +$0.00 +$0.00)
Absolute Return: +3.3%
= +$668.05/$20,000.00
Annualized Return: +33.0%
= (+$668.05/$20,000.00)*(365/37 days)
2. Fusion-io Inc. (FIO) -- Closed
The transactions were as follows:
04/28/2014 Sold 7 Fusion-io Inc. (FIO) May2014 $9.00 Put Options @ $.80
Note: the price of FIO was $8.40 when these Puts were sold.
05/16/2014 FIO put options expired, so 700 shares of FIO were purchased at $9.00
Note: the price of FIO was $8.09 on the May2014 options expiration date
05/21/2014 Sold to Open 7 FIO Jun2014 $9.00 Call options @ $.30
Note: the price of FIO was $8.63 when these call options were sold
06/20/2014 700 shares of FIO stock sold at $9.00 strike price
Note: the price of FIO was $11.69 on the Jun2014 options expiration date
The overall performance results(including commissions) for these FIO transactions was as follows:
100% Cash-Secured Cost Basis: $6,300.00
= $9.00*700
Net Profit:
(a) Options Income: +$743.60
= ($.80+$.30) *700 shares - 2*$13.20 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (FIO closed above the $9.00 strike price upon Jun2014 expiration):
+$0.00 = ($9.00-$9.00)*700 shares
Total Net Profit (FIO closed above $9.00 strike price at Jun2014 options expiration): +$743.60 = (+$743.60 +$0.00 +$0.00)
Absolute Return (FIO stock was above $9.00 strike price upon Jun2014 expiration stock was called away): +11.8%
= +$743.60/$6,300.00
Annualized Return: +79.8%
= (+$743.60/$6,300.00)*(365/54 days)
3. HollyFrontier Corporation (HFC) -- Closed
The transactions were as follows:
5/23/2014 Bought 300 HFC shares @ $49.32
5/23/2014 Sold 3 HFC Jun2014 $47.00 Call Options @ $2.65
Note: the price of HFC was $49.38 today when these options were sold.
5/28/2014 Ex-dividend for special dividend of $.50 per share
6/4/2014 Ex-dividend of $.32 for quarterly dividend of $.32 per share
6/20/2014 300 shares of HFC sold at special-dividend-adjusted $46.50 strike price
Note: the price of HFC was $49.63 on the Jun2014 options expiration date
The overall performance result (including commissions) for this HollyFrontier Corp (HFC) covered calls position was as follows:
Stock Purchase Cost: $14,804.95
= ($49.32*300+$8.95 commission)
Net Profit:
(a) Options Income: +$783.80
= ($2.65*300 shares) - $11.20 commissions
(b) Dividend Income (Stock assigned on Jun2014 options expiration date): +$246.00
= ($.50 + $.32) dividends per share x 300 shares)
(c) Capital
Appreciation (Stock assigned at $46.50 at Jun2014 expiration):
-$854.95
=+($46.50-$49.32)*300 - $8.95 commissions
=+($46.50-$49.32)*300 - $8.95 commissions
Total Net Profit (stock assigned at $46.50 on Jun2014 options expiration date): +$174.85
= (+$783.80 +$246.00 -$854.95)
Absolute Return (stock assigned at $46.50 at Jun2014 options expiration
date): +1.2%
= +$174.85/$14,804.95
Annualized Return: +14.4%
= +$174.85/$14,804.95
Annualized Return: +14.4%
= (+$174.85/$14,804.95)*(365/30 days)
4. Southwest Airlines (LUV) -- Closed
The transactions were as follows:
05/07/2014 Bought 400 LUV shares @ $24.15
05/07/2014 Sold 4 LUV Jun2014 $24.00 Call Options @ $.85
Note: the price of LUV was $24.15 today when these options were sold.
06/03/2014 Ex-dividend of $.04 per share
05/07/2014 Bought 400 LUV shares @ $24.15
05/07/2014 Sold 4 LUV Jun2014 $24.00 Call Options @ $.85
Note: the price of LUV was $24.15 today when these options were sold.
06/03/2014 Ex-dividend of $.04 per share
06/20/2014 400 shares of LUV sold at $24.00 strike price
Note: the price of LUV was $27.29 at Jun2014 options expiration
A possible overall performance result (including commissions) for these Southwest Airlines covered calls is as follows:
Stock Purchase Cost: $9,668.95
= ($24.15*400+$8.95 commission)
Net Profit:
(a) Options Income: +$328.05
= 400*$.85 - $11.95 commissions
(b) Dividend Income: +$16.00 = $.04 per share * 400 shares
(c) Capital Appreciation (LUV assigned at $24.00) = -$68.95
= ($24.00-$24.15)*400 - $8.95 commissions
Total Net Profit (LUV assigned at $24.00): +$275.10
= (+$328.05 +$16.00 -$68.95)
Absolute Return: +2.8%
= +$275.10/$9,668.95
Annualized Return: +22.6%
= (+$275.10/$9,668.95)*(365/46 days)
A possible overall performance result (including commissions) for these Southwest Airlines covered calls is as follows:
Stock Purchase Cost: $9,668.95
= ($24.15*400+$8.95 commission)
Net Profit:
(a) Options Income: +$328.05
= 400*$.85 - $11.95 commissions
(b) Dividend Income: +$16.00 = $.04 per share * 400 shares
(c) Capital Appreciation (LUV assigned at $24.00) = -$68.95
= ($24.00-$24.15)*400 - $8.95 commissions
Total Net Profit (LUV assigned at $24.00): +$275.10
= (+$328.05 +$16.00 -$68.95)
Absolute Return: +2.8%
= +$275.10/$9,668.95
Annualized Return: +22.6%
= (+$275.10/$9,668.95)*(365/46 days)
