Last Friday with Oct2014 Options expiration, options expired in Chevron Corporation (Symbol CVX), EMC Corporation (EMC), Google Inc. (GOOG), and Halliburton Co. (HAL). Today, November 2014 call options were sold to continue positions in each of these four stocks by establishing covered calls.
The transactions to date for each of these positions and some possible resulting return-on-investment results are as follows:
1. Chevron Corporation (CVX) -- Continuation
The transactions are as follows:
10/01/2014 Bought 300 CVX shares @ $118.54
10/01/2014 Sold 3 CVX Oct2014
$118.00 Call Options @ $2.14
Note: the price of CVX was $118.54 today when
these options were sold.
10/17/2014 3 CVX Call options expired
10/22/2014 Sold 3 Nov2014 $115.00 Calls @ $2.40
Note: the price of CVX was $115.46 when these options were sold
A possible overall performance result for this CVX position is as follows:
Stock Purchase Cost: $35,570.95
= ($118.54*300+$8.95 commission)
Net Profit:
(a) Options Income: +$1,339.60
= 300*($2.14+$2.40) - 2*$11.20
commissions
(b) Dividend Income: +$321.00 = $1.07 * 300 shares
(c) Capital Appreciation (If CVX
assigned at $115.00) = -$1,070.95
= ($115.00-$118.54)*300 - $8.95
commissions
Total Net Profit (If CVX assigned at $115.00): +$589.65
=
(+$1,339.60 +$321.00 -$1,070.95)
Absolute Return if Assigned (at $118.00):
+1.7%
= +$589.65/$35,570.95
Annualized Return If Assigned (ARIA):
+11.9%
= (+$589.65/$35,570.95)*(365/51 days)
2. EMC Corp (EMC) -- Continuation
The transactions were as follows:
10/02/2014 Bought 400 EMC shares @ $28.27
10/02/2014 Sold 4 EMC Oct2014
$28.00 Call Options @ $.75
Note: the price of EMC was $28.27 today when these
options were sold.
10/17/2014 4 Oct12014 Call options expired
10/22/2014 Sold 4 EMC Nov2014 $27.50 Call Options @ $.46
Note: the price of EMC was $26.87 when these options were sold
A possible overall performance result (including
commissions) for these EMC covered calls is as follows:
Stock Purchase Cost:
$11,316.95
= ($28.27*400+$8.95 commission)
Net Profit:
(a) Options
Income: +$460.10
= 400*($.75+$.46) - 2*$11.95 commissions
(b) Dividend Income:
+$0.00
(c) Capital Appreciation (If EMC assigned at $27.50) = -$208.95
=
($27.50-$28.27)*400 - $8.95 commissions
Total Net Profit (If EMC assigned
at $27.50): +$251.15
= (+$460.10 +$0.00 -$208.95)
Absolute Return if
Assigned (at $28.00): +2.2%
= +$251.15/$11,316.95
Annualized Return If
Assigned (ARIA): +15.9%
= (+$251.15/$11,316.95)*(365/51 days)
3. Google Inc. (GOOG) -- ContinuationThe transaction is as follows:
09/25/2014 Sold
1 Oct2014 $580.00 Put @ $13.60
Note: The price of Google was $582.05 when
this transaction was executed.
10/17/2014 1 Oct2014 Put option expired
10/22/2014 Sold 1 Nov2014 $530.00 Call option @ $18.00
Note: the price of GOOG was $538.20 when this Call option was sold
A possible overall performance result (including commissions) for this Google
transaction would be as follows:
100% Cash-Secured Cost Basis: $58,000.00 =
$580.00*100
Note: the price of GOOG was $582.05 when the Put option was
sold.
Net Profit:
(a) Options Income: +$3,140.60
= ($13.60+$18.00)*100
shares - 2*$9.70 commissions
(b) Dividend Income: +$0.00
(c) Capital
Appreciation (If GOOG closes above $530.00 at Nov2014 expiration):
-$5,000.00
=
($530.00-$580.00)*100 shares
Total Net Profit (If GOOG is above $530.00
strike price at Nov2014 options expiration):
-$1,859.40
= (+$3,140.60 +$0.00
-$5,000.00)
Absolute Return (If GOOG is above $530.00 at Nov2014 options
expiration and Put option thus expire worthless): -3.2%
=
-$1,859.40/$58,000.00
Annualized Return (If GOOG is above $580.00 at
expiration): -20.5%
= (-$1,859.40/$58,000.00)*(365/57 days)
4. Halliburton Co. (HAL) -- Continuation
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.
10/17/2014 3 Oct2014 Call options expired
10/22/2014 Sold 3 Nov2014 $55 Call options @ $2.58
Note: the price of HAL was $56.13 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: +$1,333.60
= 300*($1.94+$2.58) - 2*$11.20
commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If HAL
assigned at $55.00) = -$2,738.95
= ($55.00-$64.10)*300 - $8.95
commissions
Total Net Profit (If HAL assigned at $55.00): -$1,405.35
=
(+$1,333.60 +$0.00 -$2,738.95)
Absolute Return if Assigned (at $55.00): -7.3%
= -$1,405.35/$19,238.95
Annualized Return If Assigned (ARIA): -46.8%
=
(-$1,405.35/$19,238.95)*(365/57 days)
