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 an Oct2014 expiration and at the $50.00 strike price.  As detailed below, this investment will provide a +0.9% absolute return in 20 days (which is equivalent to a +15.7% annualized return) if Citi stock closes at or above $50.00 at options expiration on October 17th.

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

Citigroup Inc. (C)
The transaction is as follows:
09/29/2014 Sold 4 Citigroup Inc. Oct2014 $50.00 Puts @ $.46
Note: The price of Citigroup was $51.69 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 four Put options sold.

A possible overall performance result (including commissions) for this Citigroup Inc. transaction would be as follows:
100% Cash-Secured Cost Basis: $20,000.00 = $50.00*400
Note:  the price of Citigroup was $51.69 when these Put options were sold.

Net Profit:
(a) Options Income: +$172.05
= ($.46*400 shares) - $11.95 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If C remains above $50.00 at Oct2014 expiration): +$0.00
= ($50.00-$50.00)*400 shares

Total Net Profit (If C is above $50.00 strike price at Oct2014 options expiration):+$172.05 
= (+$172.05 +$0.00 +$0.00)

Absolute Return (If C is above $50.00 at Oct2014 options expiration and Put options thus expire worthless): +0.9%
= +$172.05/$20,000.00
Annualized Return (If C above $50.00 at expiration): +15.7%
= (+$172.05/$20,000.00)*(365/20 days)

The downside 'breakeven price' at expiration is at $49.54 ($50.00 - $.46), which is 4.2% below the current market price of $51.69.
The 'crossover price' at expiration is $52.15 ($51.69 + $.46).  This is the price above which it would have been more profitable to simply buy-and-hold Citigroup stock until Oct 17th (the Oct2014 options expiration date) rather than holding these short Put options.

Established a 100% Cash-Secured Put Position in Baidu Inc.

Today, the Covered Calls Advisor established a 100% Cash-Secured Puts position in Baidu Inc. ADR (Ticker Symbol BIDU) with an Oct2014 expiration and at the $215.00 strike price.  As detailed below, this investment will provide a +2.2% absolute return in 20 days (which is equivalent to a +40.8% annualized return) if Bidu closes at or above $215.00 at options expiration on Oct 18th.

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

Baidu Inc. (BIDU)
The transaction is as follows:
09/29/2014 Sold 1 Oct2014 $215.00 Put @ $4.90
Note: The price of Baidu was $218.99 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 one Put option sold.

A possible overall performance result (including commissions) for this Baidu transaction would be as follows:
100% Cash-Secured Cost Basis: $21,500.00 = $215.00*100
Note:  the price of BIDU was $218.99 when the Put option was sold.

Net Profit:
(a) Options Income: +$480.30
= ($4.90*100 shares) - $9.70 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If BIDU closes above $215.00 at Oct2014 expiration): +$0.00
= ($215.00-$215.00)*100 shares

Total Net Profit (If BIDU is above $215.00 strike price at Oct2014 options expiration):+$480.30 
= (+$480.30 +$0.00 +$0.00)

Absolute Return (If BIDU is above $215.00 at Oct2014 options expiration and Put option thus expire worthless): +2.2%
= +$480.30/$21,500.00
Annualized Return (If BIDU is above $215.00 at expiration): +40.8%
= (+$480.30/$21,500.00)*(365/20 days)

The downside 'breakeven price' at expiration is at $210.10 ($215.00 - $4.90), which is 4.1% below the current market price of $218.99.
The 'crossover price' at expiration is $223.89 ($218.99 + $4.90).  This is the price above which it would have been more profitable to simply buy-and-hold Baidu Inc. stock until October 18th (the Oct2014 options expiration date) rather than holding this short Put option.

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

Today, the Covered Calls Advisor established a 100% Cash-Secured Puts position in Google Inc. (Ticker Symbol GOOG) with a Jan2015 expiration and at the $530.00 strike price.  As detailed below, this investment will provide a +   % absolute return in 40 days (which is equivalent to a +    % annualized return) if Google closes at or above $530.00 at options expiration on Jan 16th.

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

Google Inc. (GOOG)
The transaction is as follows:
12/09/2014 Sold 1 Jan2015 $530.00 Put @ $18.20
Note: The price of Google was $522.64 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 one Put option sold.

A possible overall performance result (including commissions) for this Google transaction would be as follows:
100% Cash-Secured Cost Basis: $53,000.00
= $530.00*100
Note:  the price of GOOG was $522.64 when the Put option was sold.

Net Profit:
(a) Options Income: +$1,810.30
= ($18.20*100 shares) - $9.70 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If GOOG closes above $530.00 at Jan2015 expiration): +$0.00
= ($530.00-$530.00)*100 shares

Total Net Profit (If GOOG is above $530.00 strike price at Jan2015 options expiration): +$1,810.30 
= (+$1,810.30 +$0.00 +$0.00)

Absolute Return (If GOOG is above $530.00 at Jan2015 options expiration and Put option thus expires worthless): +3.4%
= +$1,810.30/$53,000.00
Annualized Return (If GOOG is above $530.00 at expiration): +31.2%
= (+$1,810.30/$53,000.00)*(365/40 days)

The downside 'breakeven price' at expiration is at $511.80 ($530.00 - $18.20), which is 2.1% below the current market price of $522.64.
The 'crossover price' at expiration is $540.84 ($522.64 + $18.20).  This is the price above which it would have been more profitable to simply buy-and-hold Google Inc. stock until December 16th (the Dec2015 options expiration date) rather than holding this short Put option.

Established Covered Calls Position -- Halliburton Co.

Today, a new covered calls position was established in Halliburton Co.  (Ticker Symbol HAL).  This Halliburton position was established at the $63.50 strike price and with an Oct2014 options expiration.  As shown below, this investment will provide a +2.0% absolute return in 24 days (which is equivalent to a +30.2% annualized return) if Halliburton stock closes at or above $63.50 at options expiration on Oct 18th.
The details of the associated transactions and a potential return-on-investment result are as follows:

1. Halliburton Co. (HAL)
The transactions were as follows:
09/25/2014 Bought 300 HAL shares @ $64.10
09/25/2014 Sold 3 HAL Oct2014 $63.50 Call Options @ $1.94
Note: the price of HAL was $64.10 today when these options were sold.

A possible overall performance result (including commissions) for these Halliburton covered calls is as follows:
Stock Purchase Cost: $19,238.95
= ($64.10*300+$8.95 commission)

Net Profit:
(a) Options Income: +$570.80
= 300*$1.94 - $11.20 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If HAL assigned at $63.50) = -$188.95
= ($63.50-$64.10)*300 - $8.95 commissions

Total Net Profit (If HAL assigned at $63.50): +$381.85
= (+$570.80 +$0.00 -$188.95)

Absolute Return if Assigned (at $63.50): +2.0%
= +$381.85/$19,238.95
Annualized Return If Assigned (ARIA): +30.2%
= (+$381.85/$19,238.95)*(365/24 days)

Established a 100% Cash-Secured Puts Position in Agnico Eagle Mines Ltd.

Today, the Covered Calls Advisor established a 100% Cash-Secured Puts position in Agnico Eagle Mines Ltd. (Ticker Symbol AEM) with an Oct2014 expiration and at the $30.00 strike price.  As detailed below, this investment will provide a +3.5% absolute return in 25 days (which is equivalent to a +51.7% annualized return) if Agnico Eagle stock closes at or above $30.00 at options expiration on Oct 18th.

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

Agnico Eagle Mines Ltd. (AEM)
The transaction is as follows:
09/24/2014 Sold 3 Oct2014 $30.00 Puts @ $1.10
Note: The price of Agnico Eagle was $30.03 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 three Put options sold.

A possible overall performance result (including commissions) for this Agnico Eagle Mines transaction would be as follows:
100% Cash-Secured Cost Basis: $9,000.00 = $30.00*300
Note:  the price of AEM was $30.03 when these Put options were sold.

Net Profit:
(a) Options Income: +$318.80
= ($1.10*300 shares) - $11.20 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If AEM close above $30.00 at Oct2014 expiration): +$0.00
= ($30.00-$30.00)*300 shares

Total Net Profit (If AEM is above $30.00 strike price at Oct2014 options expiration):+$318.80 
= (+$318.80 +$0.00 +$0.00)

Absolute Return (If AEM is above $30.00 at Oct2014 options expiration and Put options thus expire worthless): +3.5%
= +$318.80/$9,000.00
Annualized Return (If AEM is above $30.00 at expiration): +51.7%
= (+$318.80/$9,000.00)*(365/25 days)

The downside 'breakeven price' at expiration is at $28.90 ($30.00 - $1.10), which is 3.8% below the current market price of $30.03.
The 'crossover price' at expiration is $31.13 ($30.03 + $1.10).  This is the price above which it would have been more profitable to simply buy-and-hold Agnico Eagle Mines Ltd. stock until October 18th (the Oct2014 options expiration date) rather than holding these short Put options.

Established a 100% Cash-Secured Puts Position in American Airlines Group Inc.

Today, the Covered Calls Advisor established a 100% Cash-Secured Puts position in American Airlines Group Inc. (Ticker Symbol AAL) with an Oct2014 expiration and at the $35.00 strike price.  As detailed below, this investment will provide a +4.0% absolute return in 26 days (which is equivalent to a +56.6% annualized return) if American Airlines closes at or above $35.00 at options expiration on Oct 18th.

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

American Airlines Group Inc. (AAL)
The transaction is as follows:
09/23/2014 Sold 4 Oct2014 $35.00 Puts @ $1.44
Note: The price of American Airlines was $35.03 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 one Put option sold.

A possible overall performance result (including commissions) for this AAL transaction would be as follows:
100% Cash-Secured Cost Basis: $14,000.00
= $35.00*400
Note:  the price of AAL was $35.03 when these Put options were sold.

Net Profit:
(a) Options Income: +$564.05
= ($1.44*400 shares) - $11.95 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If AAL closes above $35.00 at Oct2014 expiration): +$0.00
= ($35.00-$35.00)*400 shares

Total Net Profit (If AAL is above $35.00 strike price at Oct2014 options expiration):+$564.05 
= (+$564.05 +$0.00 +$0.00)

Absolute Return (If AAL is above $35.00 at Oct2014 options expiration and Put options thus expire worthless): +4.0%
= +$564.05/$14,000.00
Annualized Return (If AAL is above $35.00 at expiration): +56.6%
= (+$564.05/$14,000.00)*(365/26 days)

The downside 'breakeven price' at expiration is at $33.56 ($35.00 - $1.44), which is 4.2% below the current market price of $35.03.
The 'crossover price' at expiration is $36.47 ($35.03 + $1.44).  This is the price above which it would have been more profitable to simply buy-and-hold American Airlines Group Inc. stock until October 18th (the Oct2014 options expiration date) rather than holding these short Put options.

Overall Market Meter is "Neutral"

The Covered Calls Advisor recalculated the current values for each of the eight factors used to determine the "Overall Market Meter" rating.  This month, the Overall Market Meter rating remains unchanged at Neutral.

The eight factors used can be categorized as:
- macroeconomic (the first two indicators in the chart below),
- momentum (next two indicators in the chart),
- value (next three indicators), and
- growth (the last indicator).

The current Market Meter average of 3.00 (see blue line at the bottom of the chart above) is precisely in the middle of the Neutral range (Neutral range is from 2.51 to 3.50). 

As shown in the right sidebar, the covered calls investing strategy corresponding to this overall Neutral sentiment is to "on-average sell 1% out-of-the-money covered calls for the next options expiration month".

Your comments or questions regarding this post (or the details related to any of the eight factors used in this model) are welcomed. Please email me at the address shown in the upper-right sidebar.

Regards and Godspeed,
Jeff