Established a Second EMC Corp Covered Calls Position

Today, a new covered calls position was established in EMC Corp  (Ticker Symbol EMC).  This is the second EMC covered calls position established at the Covered Calls Advisor Portfolio at the current time.  The prior position was at the $28.00 strike price and with an Oct2014 options expiration, whereas this new position is at the $29.00 strike price and for the Nov2014 expiration.  As shown below, this investment will provide a +2.8% absolute return in 47 days (which is equivalent to a +21.6% annualized return) if EMC stock is unchanged at $28.33 (today's purchase price).  If the stock were to increase above the $29.00 strike price at the Nov2014 expiration, the absolute return would be +5.1% (equivalent to a +39.9% annualized return).

The details of the associated transactions and a potential return-on-investment results are as follows:

1. EMC Corp (EMC)
The transactions were as follows:
10/07/2014 Bought 400 EMC shares @ $28.33
10/07/2014 Sold 4 EMC Nov2014 $29.00 Call Options @ $.84
Note: the price of EMC was $28.48 today when these options were sold.

Two possible overall performance results (including commissions) for these EMC covered calls is as follows:
Stock Purchase Cost: $11,340.95
= ($28.33*400+$8.95 commission)

Net Profit:
(a) Options Income: +$324.05
= 400*$.84 - $11.95 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If EMC price unchanged at $28.33) = -$8.95
= ($28.33-$28.33)*400 - $8.95 commissions; or
(c) Capital Appreciation (If EMC closes above $29.00 strike price) = +$259.05
= ($29.00-$28.33)*400 - $8.95 commissions

1. Total Net Profit (If EMC price unchanged at $28.33): +$315.10
= (+$324.05 +$0.00 -$8.95); or
2. Total Net Profit (If EMC closes above $29.00 strike price at Nov2014 options expiration): +$583.10 = ($324.05+$0.00+$259.05)

1. Absolute Return if Price Unchanged at $28.33: +2.8%
= +$315.10/$11,340.95
Annualized Return If Assigned (ARIA): +21.6%
= (+$315.10/$11,340.95)*(365/47 days)

2. Absolute Return if Assigned (at $29.00 strike price): +5.1%
= +$583.10/$11,340.95
Annualized Return If Assigned (ARIA): +39.9%
= (+$583.10/$11,340.95/$11,316.95)*(365/47 days)

The downside 'breakeven price' at expiration is at $27.49 ($28.33 - $.84), which is 3.0% below the current market price of $28.33.
The 'crossover price' at expiration is $29.17 ($28.33 + $.84). This is the price above which it would have been more profitable to simply buy-and-hold EMC stock until Nov 22nd (the Nov2014 options expiration date) rather than establish this covered calls position.

Established Covered Calls Position -- EMC Corp

Today, a new covered calls position was established in EMC Corp  (Ticker Symbol EMC).  This EMC position was established at the $28.00 strike price and with an Oct2014 options expiration.  As shown below, this investment will provide a +1.5% absolute return in 17 days (which is equivalent to a +32.5% annualized return) if EMC stock closes at or above $28.00 at options expiration on Oct 18th.

The details of the associated transactions and a potential return-on-investment result are as follows:

1. EMC Corp (EMC)
The transactions were as follows:
10/02/2014 Bought 400 EMC shares @ $28.27
10/02/2014 Sold 4 EMC Oct2014 $28.00 Call Options @ $.75
Note: the price of EMC was $28.27 today when these options were sold.

A possible overall performance result (including commissions) for these EMC covered calls is as follows:
Stock Purchase Cost: $11,316.95
= ($28.27*400+$8.95 commission)

Net Profit:
(a) Options Income: +$288.05
= 400*$.75 - $11.95 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If EMC assigned at $28.00) = -$116.95
= ($28.00-$28.27)*400 - $8.95 commissions

Total Net Profit (If EMC assigned at $28.00): +$171.10
= (+$288.05 +$0.00 -$116.95)

Absolute Return if Assigned (at $28.00): +1.5%
= +$171.10/$11,316.95
Annualized Return If Assigned (ARIA): +32.5%
= (+$171.10/$11,316.95/$11,316.95)*(365/17 days)

The downside 'breakeven price' at expiration is at $27.52 ($28.27 - $.75), which is 2.7% below the current market price of $28.27.
The 'crossover price' at expiration is $29.02 ($28.27 + $.75). This is the price above which it would have been more profitable to simply buy-and-hold EMC stock until Oct 17th (the Oct2014 options expiration date) rather than establish this covered calls position.

Established Covered Calls Position -- Chevron Corporation

Today, a new covered calls position was established in Chevron Corporation  (Ticker Symbol CVX).  This Chevron position was established at the $118.00 strike price and with a Nov2014 options expiration.  As shown below, this investment will provide a +1.3% absolute return in 18 days (which is equivalent to a +26.2% annualized return) if Chevron stock closes at or above $118.00 at options expiration on Oct 18th.

The details of the associated transactions and a potential return-on-investment result are as follows:

1. Chevron Corporation (CVX)
The transactions were as follows:
10/01/2014 Bought 300 CVX shares @ $118.54
10/01/2014 Sold 3 CVX Oct2014 $118.00 Call Options @ $2.14
Note: the price of CVX was $118.54 today when these options were sold.

A possible overall performance result (including commissions) for these Chevron covered calls is as follows:
Stock Purchase Cost: $35,570.95
= ($118.54*300+$8.95 commission)

Net Profit:
(a) Options Income: +$630.80
= 300*$2.14 - $11.20 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If CVX assigned at $118.00) = -$170.95
= ($118.00-$118.54)*300 - $8.95 commissions

Total Net Profit (If CVX assigned at $118.00): +$459.85
= (+$630.80 +$0.00 -$170.95)

Absolute Return if Assigned (at $118.00): +1.3%
= +$459.85/$35,570.95
Annualized Return If Assigned (ARIA): +26.2%
= (+$459.85/$35,570.95)*(365/18 days)

The downside 'breakeven price' at expiration is at $116.40 ($118.54 - $2.14), which is 4.7% below the current market price of $118.54.
The 'crossover price' at expiration is $24.089 ($118.54 + $2.14). This is the price above which it would have been more profitable to simply buy-and-hold Chevron stock until Nov 21st (the Nov2014 options expiration date) rather than establish this covered calls position.

Established Goldcorp Inc. Covered Calls

Yesterday, a new covered calls position was established in Goldcorp Inc. (Ticker Symbol GG) with a Nov2014  options expiration date. 

The Covered Calls Advisor believes that gold miners are very attractive investments based on their potential for earnings recoveries over the next year.  Also from a technical viewpoint, they are very oversold and are likely bottoming near current prices.  Moreover, with likely ongoing quantitative easing monetary policies of central banks worldwide, gold will continue to be an attractive alternative investment.  Gold mining stocks are likely to move significantly higher in the months ahead. 

As detailed below, this investment will provide a +5.0% absolute return in 54 days (which is equivalent to a +33.9% annualized return) if Goldcorp stock closes at or above the $23.00 strike price at options expiration on November 21st.

1. Goldcorp Inc.(GG) -- New Covered Calls Position

The transactions were as follows:

09/30/2014 Bought 300 GG shares @ $22.959
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.

Two possible overall performance results (including commissions) for this Goldcorp Inc. (GG) covered calls position is as follows:
Stock Purchase Cost: $6,896.65
= ($22.959*300+$8.95 commission)

Net Profit:
(a) Options Income: +$327.80
= 300*$1.13 - $11.20 commissions
(b) Dividend Income: +$15.00 = $.05 * 300 (monthly dividend)
(c) Capital Appreciation (If GG price unchanged at $22.959 at options expiration in Nov2014): -$8.95
= ($22.959-$22.959)*300 - $8.95 commissions; or
(c) Capital Appreciation (If GG assigned at $23.00 at Nov2014 options expiration): +$3.35
= ($23.00-$22.959)*300 - $8.95 commissions

1. Total Net Profit (If GG unchanged at $22.959 at options expiration in Nov2014): +$333.85
= (+$327.80 +$15.00 -$8.95); or
2. Total Net Profit (If GG assigned at $23.00): +$346.15
= (+$327.80 +$15.00 +$3.35)

Two possible overall return-on-investments are:
1. Absolute Return (if GG price unchanged at $22.959 at Nov2014 expiration:): +4.8%
= +$333.85/$6,896.65
Annualized Return If Unchanged (ARIU): +32.7%
= (+$333.85/$6,896.65)*(365/54 days); or

2. Absolute Return if Assigned (at $23.00): +5.0%
= +$346.15/$6,896.65
Annualized Return If Assigned (ARIA): +33.9%
= (+$346.15/$6,896.65)*(365/54 days)

The downside 'breakeven price' at expiration is at $21.87 ($23.00 - $1.13), which is 4.7% below the current market price of $22.959.
The 'crossover price' at expiration is $24.089 ($22.959 + $1.13). This is the price above which it would have been more profitable to simply buy-and-hold Goldcorp stock until Nov 21st (the Nov2014 options expiration date) rather than establish this covered calls position.