Today, the Covered Calls Advisor reduced the short position against the S&P 500 that was established in December on the same day as the Covered Calls Advisor's "Overvaluation Alert" (Click to view) was issued.
As shown below, 500 of the 1,000 shares in ProShares Short S&P500 Index (ticker symbol SH) were sold today. The result was a +3.1% absolute return (equivalent to a +41.7% annualized return-on-investment) during the 27 day period that the 500 shares were held. The detailed results for this position are:
Sold 500 Shares of ProShares Short S&P500 Index (SH)
The transactions were as follows:
12/19/2014 Bought 1,000 ProShares Short S&P 500 Index (SH) Shares @ $21.68
01/15/2015 Sold 500 SH @ $22.35
Note: 500 long SH shares are retained in the Covered Calls Advisor Portfolio
The performance result (including
commissions) for this Short S&P500 position was:
Stock
Purchase Cost: $10,848.95
= ($21.68*500+$8.95 commission)
Net
Profit: $335.00
=
($22.35-$21.68)*500 shares
Absolute Return: +3.1%
= +$335.00/$10,848.95
Annualized Return: +41.7%
=
( +$335.00/$10,848.95)*(365/27 days)
Thursday, January 15, 2015
Wednesday, January 14, 2015
Established New Short 100% Cash-Secured Puts Positions in Alcoa Inc. and Alibaba Group ADR
Today, the Covered Calls Advisor established new positions in Alcoa Inc.(ticker symbol AA) and Alibaba Group ADR (ticker symbol BABA) by selling Feb2015 Put options. Both positions are conservative ones in that they have substantial downside protection. As detailed below, the Alcoa investment will yield a +2.5% absolute
return in 39 days (which is equivalent to a +23.4% annualized
return-on-investment) if Alcoa closes above the $14.00 strike price on the Feb2015 options expiration date. The Alibaba Group position would provide a +3.1% absolute return over the same 39 day time period which is equivalent to a +28.8% annualized return-on-investment.
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 both of these positions were established using 100% cash securitization for the Put options sold.
The transactions and potential return-on-investment results are detailed below:
1. Alcoa Inc.(AA) -- New Position
The transaction was as follows:
01/14/2015 Sold 4 Alcoa Inc. Feb2015 $14.00 Puts @ $.38
Note: The price of AA was $14.78 today when this transaction was executed.
A possible overall performance result (including commissions) for this transaction would be as follows:
100% Cash-Secured Cost Basis: $5,600.00
= $14.00*400
Note: the price of AA was $14.78 when these Put options were sold.
Net Profit:
(a) Options Income: +$140.05
= ($.38*400 shares) - $11.95 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If AA is above $14.00 strike price at Feb2015 expiration): +$0.00
= ($14.00-$14.00)*400 shares
Total Net Profit (If AA is above $14.00 strike price at Feb2015 options expiration): +$140.05
= (+$140.05 +$0.00 +$0.00)
Absolute Return (If AA is above $14.00 strike price at Feb2015 options expiration): +2.5%
= +$140.05/$5,600.00
Annualized Return (If AA is above $14.00 at expiration): +23.4%
= (+$140.05/$5,600.00)*(365/39 days)
The downside 'breakeven price' at expiration is at $13.62 ($14.00 - $.38), which is 7.8% below the current market price of $14.78.
The 'crossover price' at expiration is $15.16 ($14.78 + $.38). This is the price above which it would have been more profitable to simply buy-and-hold AA until Feb 20th (the Feb2015 options expiration date) rather than selling these Put options.
2. Alibaba Group Holding ADR (BABA) -- New Position
The transaction was as follows:
01/14/2015 Sold 1 Alibaba Group ADR Feb2015 $95.00 Put @ $3.00
Note: The price of BABA was $98.55 today when this transaction was executed.
A possible overall performance result (including commissions) for this transaction would be as follows:
100% Cash-Secured Cost Basis: $9,500.00
= $95.00*100
Note: the price of BABA was $98.55 when thise Put option was sold.
Net Profit:
(a) Options Income: +$292.30
= ($3.00*100 shares) - $9.70 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If BABA is above $95.00 strike price at Feb2015 expiration): +$0.00
= ($95.00-$95.00)*100 shares
Total Net Profit (If BABA is above $95.00 strike price at Feb2015 options expiration): +$292.30
= (+$292.30 +$0.00 +$0.00)
Absolute Return (If BABA is above $95.00 strike price at Feb2015 options expiration): +3.1%
= +$292.30/$9,500.00
Annualized Return (If BABA is above $95.00 at expiration): +28.8%
= (+$292.30/$9,500.00)*(365/39 days)
The downside 'breakeven price' at expiration is at $92.00 ($95.00 - $3.00), which is 6.6% below the current market price of $98.55.
The 'crossover price' at expiration is $101.55 ($98.55 + $3.00). This is the price above which it would have been more profitable to simply buy-and-hold Alibaba until Feb 20th (the Feb2015 options expiration date) rather than selling this Put option.
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 both of these positions were established using 100% cash securitization for the Put options sold.
The transactions and potential return-on-investment results are detailed below:
1. Alcoa Inc.(AA) -- New Position
The transaction was as follows:
01/14/2015 Sold 4 Alcoa Inc. Feb2015 $14.00 Puts @ $.38
Note: The price of AA was $14.78 today when this transaction was executed.
A possible overall performance result (including commissions) for this transaction would be as follows:
100% Cash-Secured Cost Basis: $5,600.00
= $14.00*400
Note: the price of AA was $14.78 when these Put options were sold.
Net Profit:
(a) Options Income: +$140.05
= ($.38*400 shares) - $11.95 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If AA is above $14.00 strike price at Feb2015 expiration): +$0.00
= ($14.00-$14.00)*400 shares
Total Net Profit (If AA is above $14.00 strike price at Feb2015 options expiration): +$140.05
= (+$140.05 +$0.00 +$0.00)
Absolute Return (If AA is above $14.00 strike price at Feb2015 options expiration): +2.5%
= +$140.05/$5,600.00
Annualized Return (If AA is above $14.00 at expiration): +23.4%
= (+$140.05/$5,600.00)*(365/39 days)
The downside 'breakeven price' at expiration is at $13.62 ($14.00 - $.38), which is 7.8% below the current market price of $14.78.
The 'crossover price' at expiration is $15.16 ($14.78 + $.38). This is the price above which it would have been more profitable to simply buy-and-hold AA until Feb 20th (the Feb2015 options expiration date) rather than selling these Put options.
2. Alibaba Group Holding ADR (BABA) -- New Position
The transaction was as follows:
01/14/2015 Sold 1 Alibaba Group ADR Feb2015 $95.00 Put @ $3.00
Note: The price of BABA was $98.55 today when this transaction was executed.
A possible overall performance result (including commissions) for this transaction would be as follows:
100% Cash-Secured Cost Basis: $9,500.00
= $95.00*100
Note: the price of BABA was $98.55 when thise Put option was sold.
Net Profit:
(a) Options Income: +$292.30
= ($3.00*100 shares) - $9.70 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If BABA is above $95.00 strike price at Feb2015 expiration): +$0.00
= ($95.00-$95.00)*100 shares
Total Net Profit (If BABA is above $95.00 strike price at Feb2015 options expiration): +$292.30
= (+$292.30 +$0.00 +$0.00)
Absolute Return (If BABA is above $95.00 strike price at Feb2015 options expiration): +3.1%
= +$292.30/$9,500.00
Annualized Return (If BABA is above $95.00 at expiration): +28.8%
= (+$292.30/$9,500.00)*(365/39 days)
The downside 'breakeven price' at expiration is at $92.00 ($95.00 - $3.00), which is 6.6% below the current market price of $98.55.
The 'crossover price' at expiration is $101.55 ($98.55 + $3.00). This is the price above which it would have been more profitable to simply buy-and-hold Alibaba until Feb 20th (the Feb2015 options expiration date) rather than selling this Put option.
Sunday, January 11, 2015
Country Value Rankings
A comprehensive approach to asset allocation extends beyond
diversification solely by asset classes (i.e. stocks, bonds, real
estate, commodities, etc.). It should also include diversification by
global geography. Behavioral finance research has clearly identified the
profound tendency of most investors to succumb to "home-country bias".
Legendary investor John Templeton was a leading advocate for developing a
globally oriented value investing perspective to achieve investing
outperformance.
The Covered Calls Advisor has developed a method for determining the relative investing worthiness of twenty countries and two regions around the world. The "Country Value Rankings" table below is based on a weighted-average ranking system. The eight factors used to calculate these rankings are as follows:
Today's results, shown in the table below, provides a value-oriented and objective framework that assists this advisor to make decisions regarding overweighting and underweighting specific countries and regions in the Covered Calls Advisor's Portfolio.
From the chart above, the resulting overall market ratings for individual countries and regions are:
Very Bullish (Above 25 total points) -- None
Bullish (20-25 points) -- Singapore and China
Slightly Bullish (15-20 points) -- South Korea, Switzerland, Taiwan, Emerging Markets, Sweden, and Hong Kong
Neutral (10-15 points) -- Malaysia, Germany, Australia, Russia, EurAsia, U.S., and United Kingdom
Slightly Bearish -- Canada, Italy, Spain, France, Mexico, and Japan
Bearish -- South Africa
Very Bearish -- India and Brazil
Future investments in the Covered Calls Advisor Portfolio will be overweighted in these higher rated countries. It should also be noted that the U.S. is currently ranked 14th of the 24 ratings and the overall rating for the U.S. is Neutral.
This Country Value Rankings spreadsheet is detailed in terms of both the methodology used and the resources used to capture the information for each country. If you are interested in these details and would like further information or clarification, please email your comments and questions (to the address in the top right sidebar of this blog). They are always welcomed.
Hopefully, this information is helpful in your thinking and analysis of your own equities selection methods related to your covered calls investing process!
Regards and Godspeed to All,
Jeff
The Covered Calls Advisor has developed a method for determining the relative investing worthiness of twenty countries and two regions around the world. The "Country Value Rankings" table below is based on a weighted-average ranking system. The eight factors used to calculate these rankings are as follows:
Today's results, shown in the table below, provides a value-oriented and objective framework that assists this advisor to make decisions regarding overweighting and underweighting specific countries and regions in the Covered Calls Advisor's Portfolio.
From the chart above, the resulting overall market ratings for individual countries and regions are:
Very Bullish (Above 25 total points) -- None
Bullish (20-25 points) -- Singapore and China
Slightly Bullish (15-20 points) -- South Korea, Switzerland, Taiwan, Emerging Markets, Sweden, and Hong Kong
Neutral (10-15 points) -- Malaysia, Germany, Australia, Russia, EurAsia, U.S., and United Kingdom
Slightly Bearish -- Canada, Italy, Spain, France, Mexico, and Japan
Bearish -- South Africa
Very Bearish -- India and Brazil
Future investments in the Covered Calls Advisor Portfolio will be overweighted in these higher rated countries. It should also be noted that the U.S. is currently ranked 14th of the 24 ratings and the overall rating for the U.S. is Neutral.
This Country Value Rankings spreadsheet is detailed in terms of both the methodology used and the resources used to capture the information for each country. If you are interested in these details and would like further information or clarification, please email your comments and questions (to the address in the top right sidebar of this blog). They are always welcomed.
Hopefully, this information is helpful in your thinking and analysis of your own equities selection methods related to your covered calls investing process!
Regards and Godspeed to All,
Jeff
Saturday, January 10, 2015
Short 100% Cash-Secured Puts Position in Apple Inc. -- Closed
The Covered Calls Advisor's short position in two Apple Inc. (Symbol AAPL) Jan9th2015 $105.00 Weekly Put options expired yesterday since Apple Inc. closed above the $105.00 strike price. This result achieved the maximum profit potential from this Weekly position of +1.0% absolute return (+74.2% annualized) for the 5 days holding period. This transaction and the return-on-investment result is detailed belowApple Inc. (AAPL) -- Closed
The transaction was as follows:
01/05/2015 Sold 2 Apple Inc. Jan 9, 2015 $105.00 Puts @ $1.12
Note: The price of AAPL was $106.53 when this transaction was executed
01/09/2015 2 AAPL Jan 9th $105.00 short Put options expired
Note: the price of AAPL was $112.01 upon options expiration yesterday
The Covered Calls Advisor does not use margin, so the return-on-investment information on this position and some potential results shown below reflect the fact that this position was established using 100% cash securitization for the two Put options sold.
The overall performance result (including commissions) for this transaction was as follows:
100% Cash-Secured Cost Basis: $21,000.00
= $105.00*200
Note: the price of AAPL was $106.53 when these Put options were sold.
Net Profit:
(a) Options Income: +$213.55
= ($1.12*200 shares) - $10.45 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (AAPL closed above the $105.00 strike price at Jan 9th, 2015 expiration): +$0.00
= ($105.00-$105.00)*200 shares
Total Net Profit (AAPL closed above $105.00 strike so the short options expired worthless): +$213.55
= (+$213.55 +$0.00 +$0.00)
Absolute Return: +1.0%
= +$213.55/$21,000.00
Annualized Return: +74.2%
= (+$213.55/$21,000.00)*(365/5 days)
Subscribe to:
Posts (Atom)