March 2016 Options Expiration Results

The Covered Calls Advisor Portfolio contained fifteen positions with March 18th, 2016 expirations.  All fifteen positions were in-the-money at expiration so the positions were closed out and the maximum potential return-on-investment (ROI) was achieved for all positions. The overall average annualized ROI for these fifteen positions was +22.8%.  The result for each position was:

• Alibaba Group Holding Ltd. = -4.7% absolute return (-20.2% annualized return over 85 days)
• Apple Inc. = +1.0% absolute return (+19.3% annualized return over 19 days)
• Bank of America Corp. = +3.0% absolute return (+44.3% annualized return over 25 days)
• Delta Air Lines Inc. = +0.9% absolute return (+19.8% annualized return over 17 days)
• Enterprise Products Partners LP = +2.2% absolute return (+32.8% annualized return over 24 days)
• General Motors Co. = -1.5% absolute return (-6.9% annualized return over 81 days)
• iShares China Large-Cap ETF (Position 1) = +1.6% absolute return (+30.0% annualized return over 19 days)
• iShares China Large-Cap ETF (Position 2) = +8.8% absolute return (+57.6% annualized return over 56 days)
• iShares MSCI Emerging Markets ETF = +1.1% absolute return (+16.2% annualized return over 24 days)
• iShares MSCI South Korea ETF = +6.0% absolute return (+37.0% annualized return over 59 days)
• iShares Nasdaq Biotechnology ETF = +2.6% absolute return (+39.2% annualized return over 24 days)
• JPMorgan Chase & Co. = +0.9% absolute return (+4.6% annualized return over 74 days)
• MetLife Inc. = +0.7% absolute return (+4.0% annualized return over 59 days)
• Nationstar Mortgage Holdings Inc. = +5.4% absolute return (+19.5% annualized return over 110 days)
• Tesoro Corporation = +3.5% absolute return (+44.3% annualized return over 29 days) 

Two examples of how these ROIs were calculated are detailed below.  Bank of America was a Covered Calls position and Apple Inc. was a 100% Cash-Secured Puts position.

1. Bank of America Corporation (BAC) -- Covered Calls Position Closed at Expiration
The transactions were:
02/23/2016 Bought 700 Bank of America Corporation shares @ $12.21
02/23/2016 Sold 7 BAC Mar2016 $12.00 Call options @ $.55
Note: a simultaneous buy/write transaction was executed.
03/02/2016 Ex-dividend of $.05 per share
03/18/2016 7 BAC Mar2016 Calls expired in-the-money and the 700 BAC shares were sold at the $12.00 strike price.
Note: the price of BAC was $13.79 upon the Mar2016 options expiration.

The overall performance result (including commissions) for this Bank of America covered calls position was as follows:
Stock Purchase Cost: $8,554.95
= ($12.21*700+$7.95 commission)

Net Profit:
(a) Options Income: +$379.75
= ($.55*700 shares) - $5.25 commission
(b) Dividend Income: +$35.00
= ($.05 dividend per share x 700 shares)

(c) Capital Appreciation (BAC assigned at $12.00 at Mar2016 expiration): -$154.95
+($12.00-$12.21)*700 - $7.95 commissions

Total Net Profit (BAC stock called away at $12.00 at Mar2016 expiration): +259.80
= (+$379.95 +$35.00 -$154.95)

Absolute Return: +3.0%

= +$259.80/$8,554.95

Annualized Return: +44.3%

= (+$259.80/$8,554.95)*(365/25 days)


2. Apple Inc. (AAPL) -- 100% Cash-Secured Puts Position Closed at Expiration
The transactions were as follows:
02/29//2016  Sold 2 AAPL 100% cash-secured $94.00 Put options @ $.95
Note: The price of AAPL was $97.47 when this transaction was executed.
03/18/2016 2 AAPL Put options expired.  The price of AAPL stock was $105.92 upon Mar2016 options expiration.

The overall performance result (including commissions) was as follows:
100% Cash-Secured Cost Basis: $18,807.95
= $94.00*200 + $7.95

Net Profit:
(a) Options Income: +$188.50
= ($.95*200 shares) - $1.50 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (AAPL was above $94.00 strike price at Mar2016 expiration): +$0.00
= ($94.00-$94.00)*200 shares

Total Net Profit (If Apple is above $94.00 strike price at Mar2016 options expiration): +$188.50
= (+$188.50 +$0.00 +$0.00)

Absolute Return (AAPL was above $94.00 strike price at Mar2016 options expiration): +1.0%
= +$188.50/$18,807.95
Annualized Return (AAPL was above $94.00 strike price at expiration): +19.3%
= (+$188.50/$18,807.95)*(365/19 days)

The cash now 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.  With the expiration of the fifteen positions yesterday, the Portfolio is now about 90% cash and about 10% invested in the four Apr2016 (expiring April 15th, 2016) positions listed in the right sidebar.  In the days ahead, the transactions associated with any new positions established with the available cash will be posted on this blog on the same day they occur.