As detailed below, the actual return-on-investment result for this closed position was a +1.7% absolute return (equivalent to +19.8% annualized return) for the 32 days holding period.
1. Hawaiian Holdings Inc. (HA) -- Closed Position
The transactions history was:
02/16/2017 Sold 5 HA Mar2017 $50.00 100% cash-secured Put options @ $1.45
Note: the price of HA was $50.65 when this transaction was executed.
03/17/2017 5 short HA Put options expired below the $50 strike price and 500 shares HA stock purchased at $50 per share
03/20/2017 Sold 500 shares of HA at $49.45 per share
The Covered Calls Advisor does not use margin, so the detailed information on this position and the result shown below reflect the fact that this position was established using 100% cash securitization for the five Put options sold.
The overall performance result (including commissions) was as follows:
100% Cash-Secured Cost Basis: $25,004.95
= $50.00*500 + $4.95 commission
Note: the price of HA was $50.65 when these options were sold
Net Profit:
(a) Options Income: +$714.55
= ($1.45*500 shares) - $10.45 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation: -$279.95
= ($49.45-$50.00)*500 shares - $4.95 commission
Total Net Profit: +$434.60
= (+$714.55 options income +$0.00 dividend income -$279.95 capital appreciation)
Absolute Return: +1.7%
= +$434.60/$25,004.95
Annualized Return: +19.8%
= (+$434.60/$25,004.95)*(365/32 days)
2. AmTrust Financial Services Inc. (AFSI) -- Position Closed
Sometimes you win and sometimes you lose, and this position was clearly a loser. The day after the position was established, the company revealed that their auditor was being terminated and they would be delaying disclosure of revised financial results back to 2014 pending review by their newly appointed audit company. Needless to say, the stock was hammered with this news. Upon further research over this past weekend, it was decided to exit the position today and accept the substantial losses shown below.03/16/2017 Bought 1,000 AmTrust Financial Services shares @ $21.55
03/16/2017 Sold 10 AFSI Apr2017 $20.00 Call options @ $2.05
Note: this was a simultaneous buy/write transaction.
03/20/2017 Exited the AFSI covered calls position with an unwind transaction by selling 1,000 shares at $17.30 and simulaneously bought back 10 Apr2017 Call options @ $.30
The overall performance result (including commissions) was as follows:
Bought 1,000 shares AFSI: $21,554.95
= $21.55*1,000 + $4.95 commission
Net Profit:
(a) Options Income: +$1,738.55
= ($2.05 - $.30) *1,000 shares - $11.45 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation: -$4,254.95
= ($17.30 - $21.55)*1,000 shares - $4.95 commissions
Total Net Profit: -$2,516.40
= (+$1,738.55 options income +$0.00 dividends -$4,254.95 capital appreciation)
