The details of the associated transactions and a potential return-on-investment results are as follows:
1. Goldcorp Inc.(GG) -- Covered Calls Continuation Position
The transactions were as follows:
09/30/2014 Bought 300 GG shares @ $22.959 The transactions were as follows:
09/30/2013 Sold 3 GG Nov2014 $23.00 Call Options @ $1.13
Note: the price of GG was $23.04 when these options were sold.
11/21/2014 3 Nov2014 Call Options expired.
12/01/2014 Sold 3 GG Dec2014 $22.00 Calls @ $.53
Note: the price of Goldcorp was $21.15 when these call options were sold.
Two possible overall performance results (including commissions) for this Goldcorp Inc. (GG) covered calls position are as follows:
Stock Purchase Cost: $6,896.65
= ($22.959*300+$8.95 commission)
Net Profit:
(a) Options Income: +$475.60
= 300*($1.13+$.53) - 2*$11.20 commissions
(b) Dividend Income: +$30.00
= $.05 * 300 (monthly dividend) * 2 months
(c) Capital Appreciation (If GG price unchanged at $21.15 at options expiration in Dec2014): -$551.65
= ($21.15-$22.959)*300 - $8.95 commissions; or
(c) Capital Appreciation (If GG assigned at $22.00 at Dec2014 options expiration): -$296.65
= ($22.00-$22.959)*300 - $8.95 commissions
1. Total Net Profit (If GG unchanged at $21.15 at options expiration in Dec2014): -$46.05
= (+$475.60 +$30.00 -$551.65); or
2. Total Net Profit (If GG assigned at $22.00): +$208.95
= (+$475.60 +$30.00 -$296.65)
Two possible overall return-on-investments are:
1. Absolute Return (if GG price unchanged at $21.15 at Dec2014 expiration:): -0.7%
= -$46.05/$6,896.65
Annualized Return If Unchanged (ARIU): -3.0%
= (-$46.05/$6,896.65)*(365/81 days); or
2. Absolute Return if Assigned (at $22.00): +3.0%
= +$208.95/$6,896.65
Annualized Return If Assigned (ARIA): +13.7%
= (+$208.95/$6,896.65)*(365/81 days)
