Continuation of Agnico Eagle Mines and Alibaba Covered Calls Positions

The Covered Calls Advisor Portfolio held five positions at the Dec2016 options expiration.  Three of these positions were assigned upon expiration and the maximum return-on-investment results were achieved: Link
For the other two positions [Agnico Eagle Mines Ltd. (500 shares) and Alibaba Group Holdings (400 shares)] the price of the equities closed below their strike prices, so the options expired worthless and the long shares were retained in the Portfolio.  Today, covered calls were established to continue these two holdings as follows:

1. Agnico Eagle Mines (AEM) -- Continuing Covered Calls Position
The transactions to date are as follows:
11/16/2016 Sold 5 Dec2016 $43.00 Puts @ $1.95
Note: The price of Agnico Eagle was $43.93 when this transaction was executed.
12/16/2016 5 Put options exercised and 500 shares AEM purchased at $43.00 strike price.
12/29/2016 Sold 5 Jan2017 AEM $42.50 Call options @ $1.60 when stock price was $42.10

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 five Put options sold.

A possible overall performance result (including commissions) for this AEM position is as follows:
Stock Purchase Cost: $21,507.95
= ($43.00*500+$7.95 commission)

Net Profit:
(a) Options Income: +$1,751.60
= ($1.95 + $1.60)*500 shares - 2*$11.70 commissions
(b) Dividend Income: +$0.00
= ($0.00 dividend per share x 500 shares)

(c) Capital Appreciation (If stock assigned at $42.50 at Jan 20, 2017 expiration): -$257.95
+($42.50-$43.00)*500 - $7.95 commissions

Total Net Profit (If stock assigned at $42.50 at Jan 20, 2017 expiration): +$1,493.65

= (+$1,751.60 +$0.00 -$257.95)

Absolute Return (If stock assigned at $42.50 at Jan 20, 2017 expiration): +6.9%

= +$1,493.65/$21,507.95

Annualized Return (If stock assigned at $42.50 at Jan 20, 2017 expiration): +39.0%

= (+$1,493.65/$21,507.95)*365/65 days

2. Alibaba Group Holdings (BABA) -- Continuation of Covered Calls Position
The transactions to-date are:
10/26/2016 Sold 4 Alibaba (BABA) Nov2016 $95.00 100% Cash-Secured Put options @ $1.25
11/18/2016 4 BABA Puts assigned and 400 shares of Alibaba purchased at $95.00
11/21/2016 Sold 4 BABA Dec2016 $95.00 Call options @ $2.26
Note: the price of BABA was $94.27 when these Call options were sold
12/16/2016 4 BABA Call options expired worthless
12/29/2016 Sold 4 Jan2017 BABA $92.50 Call options @ $.72 when stock price was $88.05

A possible overall performance result (including commissions) for this BABA position is as follows:
Stock Purchase Cost: $38,007.95
= ($95.00*400+$7.95 commission)

Net Profit:
(a) Options Income: +$1,659.15
= ($1.25 + $2.26 + $.72) * 400 shares - 3*$10.95 commissions
(b) Dividend Income: +$0.00
= ($0.00 dividend per share x 400 shares)

(c) Capital Appreciation (If stock assigned at $92.50 at Jan 20, 2017 expiration): -$1,007.95
+($92.50-$95.00)*500 - $7.95 commissions

Total Net Profit (If stock assigned at $92.50 at Jan 20, 2017 expiration): +$651.20

= (+$1,659.15 +$0.00 -$1,007.95)

Absolute Return (If BABA assigned at $92.50 at Jan 20, 2017 expiration): +1.7%

= +$651.20/$38,007.95

Annualized Return: +7.3%

= (+$1,493.65/$21,507.95)*365/86 days

The current holdings for these two positions are shown in the right sidebar of this blog.

December 2016 Option Expiration Results

The Covered Calls Advisor Portfolio (CCAP) contained five positions with December 2016 expirations.  Three of the five positions were closed out at the options expiration this past Friday.  For the remaining two positions, the price of the stock closed below the strike price; so the options expired and the associated long shares will remain in the Covered Calls Advisor Portfolio until these shares are either sold or continuation covered calls positions established by selling Jan2017 call options against the shares owned.  The results for these five positions are:  

I.  For the three closed positions:
The overall average annualized return-on-investment for these three closed positions was +22.5%.  The return-on-investment results for each position was:

• Amazon.com Inc. = +1.1% absolute return (+23.0% annualized return)
• Blackstone Group LP = +2.3% absolute return (+21.2% annualized return)
• Noble Energy Inc. = +1.8% absolute return (+23.2% annualized return)

One of the positions (Blackstone Group) was a Covered Calls and two (Amazon.com Inc. and Noble Energy Inc.) were 100% Cash-Secured Puts.
Below are two examples that demonstrate how the returns shown above are calculated.  The Blackstone Group LP position details are provided to show calculations for a Covered Calls position and Amazon.com Inc. details an example for a 100% Cash-Secured Put position.

The cash now available in the Covered Calls Advisor Portfolio from the closing of these three positions will be retained until new covered calls and/or 100% cash-secured puts positions are established.  Any new positions established in the near future with this available cash will be posted on this site on the same day the transactions occur.

Blackstone Group LP -- Example of Covered Calls Position Closed at Expiration
The transactions were as follows:
11/08/2016  Bought 1,000 Blackstone shares @ $23.59
11/08/2016 Sold 10 BX Dec2016 $23.00 Call options @ $1.14
Note: this was a simultaneous buy/write transaction.
12/16/2016 10 Call options expired in-the-money and 1,000 BX shares were sold at the $23 strike price.

The overall performance result (including commissions) was as follows:
Bought 1,000 shares BX: $23,597.95
= $23.59*1,000 + $7.95 commission

Net Profit:
(a) Options Income: +$1,132.50
= ($1.14*1,000 shares) - $7.50 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (BX was above $23.00 strike price at Dec2016 expiration): -$597.95
= ($23.00-$23.59)*1,000 shares - $7.95 commissions

Total Net Profit: +$534.55
= (+$1,132.50 options income +$0.00 dividends -$597.95 capital appreciation)

Absolute Return: +2.3%
= +$534.55/$23,597.95
Annualized Return: +21.2%
= (+$534.55/$23,597.95)*(365/39 days)


Amazon.com Inc. -- Example of 100% Cash-Secured Put Position Closed at Expiration
The transaction was as follows:
11/29/2016 Sold 1 Dec2016 $750.00 Put @ $8.60
Note: The price of Amazon.com stock was $769.70 when this transaction was executed.
12/16/2016 The AMZN Dec2016 $750 Put expired with the stock price above the strike price upon options expiration.

The Covered Calls Advisor does not use margin, so the detailed information on this position and the results shown below reflect the fact that this position was established using 100% cash securitization for the Put option sold.

The overall performance result (including commissions) for this Amazon.com transaction was as follows:
100% Cash-Secured Cost Basis: $75,000.00 = $750.00 * 100 shares

Net Profit:
(a) Options Income: +$851.30
= ($8.60*100 shares) - $8.70 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (AMZN stock closed above $750.00 at Dec2016 expiration): +$0.00
= ($750.00-$750.00)*100 shares

Total Net Profit:+$851.30 
= (+$851.30 +$0.00 +$0.00)

Absolute Return: +1.1%
= +$851.30/$75,000.00
Annualized Return: +23.0%
= (+$851.30/$75,000.00)*(365/18 days)


II. For the two continuing positions:
The two positions that ended at Dec2016 options expiration with the price of the stock below the strike price were Agnico Eagle Mines (500 shares) and Alibaba Group (400 shares).

These positions are included in the listing of the current Covered Calls Advisor Portfolio shown in the right sidebar on this page. For these positions, the options expired and the long shares will remain in the Portfolio until they are either sold or new Covered Calls are established by selling associated Jan2017 options against the stock currently held.   In either case, transactions and overall position results will be posted on this site on the same day they occur.