A potential return-on-investment is +9.4% absolute return (equivalent to +43.1% annualized) for the 80 days of this Cal-Maine investment. Details of these Cal-Maine transactions to-date and a potential return-on-investment result are provided below:
1. Cal-Maine Foods Inc. (CALM) -- Continuation
12/01/2015 Sold 4 CALM Dec2015 $50.00 100% cash-secured Put options @ $1.20
Note: the price of CALM was $52.10 today when this transaction was executed.
12/18/2015 4 CALM Dec2015 Puts assigned and 400 shares of Cal-Maine stock purchased at $50.00 strike price
Note: the price of CALM was $47.52 upon the Dec2015 options expiration
12/24/2015 Established a covered calls position by selling 4 Jan2016 $50.00 Call options @ $2.45
Note: the price of CALM was $50.84 when these Call options were sold.
01/15/2016 4 CALM Jan2016 Call options expired
Note: the price of CALM was $49.39 at the market close on 1/15/2016 (Jan 2016 options expiration)
01/25/2016 $300.40 = ($.751 dividend x 400 shares) ex-dividend
01/25/2016 Sold 4 Feb2016 $47.50 Call options @ $2.90
Note: the price of CALM was $48.84 when these Calls were sold
A possible overall performance result (including commissions) would be as follows:
100% Cash-Secured Cost Basis: $20,000.00
= $50.00*400
Net Profit:
(a) Options Income: +$2,587.15
= ($1.20 +$2.45 +$2.90)*400 shares - 3*$10.95 commissions
(b) Dividend Income: +$300.40
= $.751 dividend x 400 shares
(c) Capital Appreciation (If CALM is above $47.50 strike price at Feb2016 expiration): -$1,000.00
= ($47.50-$50.00)*400 shares
Total Net Profit (If CALM is above $47.50 strike price at Feb2016 options expiration): +$1,887.55
= (+$2,587.15 options income +$300.40 dividend income -$1,000.00 capital appreciation)
Absolute Return (If CALM is above $47.50 strike price at Feb2016 options expiration): +9.4%
= +$1,887.55/$20,000.00
Annualized Return: +43.1%
= (+$1,887.55/$20,000.00)*(365/80 days)
