This last week has been rather interesting, even with earnings all over the place, thanks to GOOG falling way short and INTC crushing, we have had light volume, maybe it was because of Good Friday, or we are waiting on some more earning next week...
On Wednesday, I was able to sell some more of the 1150/1125 spreads (yes that is 16.44% OTM) for $25 per spread... leading to a 3.48% return leveraged over the next 38 days (this is within my profit zone, I look for anything between 3% and 5%) . At the open of Friday they were worth $8, so I plan on closing some out Monday to clear up some margin and move up 25 points to the 1175/1150 spreads which are selling for $40/spread. Statistically, the 1150 has a 99.98% chance of success and the 1175 has a 99.85% chance of success. (I will take those odds) I try to stay above the 95% chance of success line, it means lower profits, but drastically lower risk profiles.
I also went back to the good ole days where I dealt with Covered Calls (a.k.a. synthetic puts) where I buy shares in a company, and then lock in profits by selling calls at a certain strike price. The trade went as follows:
I bought shares of CLF (Cliff Natural Resources) for $95.835/share and sold calls at the $90 strike price for $7.52285/share. This leads to a MAXIMUM profit of $1.68785/share. I will break down the trade a little further here... I wanted to go lower risk for this trade since their earning will be released on the 28th, and this stock tends to have larger swings, so I decided that I would go ITM, where I will loose $5.835 a share on the stock, but since I received over $5.835/share on the contract premiums, I will make the difference as long as the stock stays above $90. If it doesn't, then my cost basis for the stock would drop to $88.30 (over 8% of downside protection). Another reason to go ITM on this trade is leverage is so low, that I only needed to come up with 10% of the total trade to put it on, so my leveraged return is over 20% for 28 days of holding the stock. I only did this trade in a small fraction of my portfolio, it is a speculative play.
Saturday, April 23, 2011
Monday, June 29, 2009
New Covered Call- HGSI
Initial Transaction -- Bought 1000 shares of HGSI @ $2.96 = $2,960
Sold to Open 10 July 2.50's @ $.78 = $780
Return IF Stock is Called = 10.81%
Option Income (.78*1000) = $780
Stock Appreciation (2.5-2.96)*1000 = -$460
Net Profit = 780-460 = $320
Annualized Return IF Exercised (ARIE) = 218.55%
(320/2969)*(365/18 Days)
This was a gamble, I like how they have FDA approval, and there doesn't seem to be any really large news coming out between now and then... It's a small portion of my portfolio so we will see how well it works.
Sold to Open 10 July 2.50's @ $.78 = $780
Return IF Stock is Called = 10.81%
Option Income (.78*1000) = $780
Stock Appreciation (2.5-2.96)*1000 = -$460
Net Profit = 780-460 = $320
Annualized Return IF Exercised (ARIE) = 218.55%
(320/2969)*(365/18 Days)
This was a gamble, I like how they have FDA approval, and there doesn't seem to be any really large news coming out between now and then... It's a small portion of my portfolio so we will see how well it works.
Friday, June 26, 2009
Current Covered Calls
Below is a list of the current CC's I have, after this post I will add a new post for each trade I initiate:
1) 6-26-09 (16 Trading Days to Expiration)
Initial Transaction -- Bought 200 shares of CAT @ $34.52 = $6,904
Sold to Open 2 July 35's @ $1.03 = $206
Return IF Stock is Called = 4.37%
Option Income (1.03*200) = $206
Stock Appreciation (35-34.52)*200 = $96
Net Profit = 206+96 = $302
Annualized Return IF Exercised (ARIE) = 75.95%
(302/6904)*(365/21 Days)
Premium = 2.98%
(96/6904)
This was OTM, so I could have a chance to hand onto the stock for the dividend in a couple months. If I get called, I am fine with a 4.37% return over 16 trading days.
Initial Transaction -- Bought 300 shares of UNG @ $14.18 = $4254
Sold to Open 3 July 14's @ $0.93 = $279
Return IF Stock is Called = 5.28%
Option Income ($0.93*300) = $279
Stock Appreciation (14.00-14.18)*300 = -$54
Net Profit = 279+(-54) = $225
Annualized Return IF Exercised (ARIE) = 104.18%
(255/4254)*(365/21 Days)
Premium = 6.55%
(96/6904)
This seemed like a safe play with UNG trading near its 52-week low and the premium allows for decent downside protection.
2) 6-25-09 (17 Trading Days to Expiration)
Initial Transaction -- Bought 200 Shares of FDO @ $28.99 = $5798
Sold to Open 2 July 30's $0.88 = $176
Return IF Stock is Called = 6.51%
Option Income ($0.88*200) = $176
Stock Appreciation (30.00-28.99)*200 = $202
Net Profit = 176+202 = $378
Annualized Return IF Exercised (ARIE) = 108.16%
(378/5798)*(365/22 Days)
Premium = 3.03%
(96/6904)
Family Dollar has a solid financial base and is a stock I want to own, so I decided to go a little further OTM with the Call. Normally I like to keep the options either ATM or ITM, but these last few seem to be good investments.
3) 6-24-09 (18 Trading Days to Expiration)
Bought 400 Shares of AA @ $10.39
Sold to Open 4 July 10's @ $0.95
Return IF Stock is Called = 5.39%
Option Income (0.95*400) = $380
Stock Appreciation (10-10.39)*400 = -$156
Net Profit = 380-156 = $224
Annualized Return IF Exercised (ARIE) = 85.53%
(244/4146)*(365/23 Days)
Premium = 9.14%
I have had good luck with AA over the last couple months, so I decided to initiate another position.
Bought 300 Shares of GE @ $11.95
Sold to Open 3 July 12's @ $0.55
Return IF Stock is Called = 5.02%
Option Income (0.55*300) = $165
Stock Appreciation (12-11.95)*300 = $15
Net Profit = 165+15 = $180
Annualized Return IF Exercised (ARIE) = 79.67%
(180/3585)*(365/23 Days)
Premium = 4.60%
This trade was a little riskier for my taste, but I decided it was a small portion of my portfolio and there wasn't really any major news coming out that would shake this company.
4) 6-23-09 (19 Trading Days to Expiration)
Bought 300 Shares of NOK @ $14.21
Sold to Open 3 July 15's @ $0.37
Return IF Stock is Called = 8.16%
Option Income (0.37*300) = $111
Stock Appreciation (15-14.21)*300 = $237
Net Profit = 111+237 = $348
Annualized Return IF Exercised (ARIE) = 124.15%
(348/4263)*(365/24 Days)
Premium = 2.60%
5) 6-19-09 (21 Trading Days to Expiration)
Bought 200 shares of HPQ @ $38.21
Sold to Open 2 August 40's @ $1.31
Return IF Stock is Called = 8.11%
Option Income (1.31*200) = $262
Stock Appreciation (40-38.21)*200 = $358
Net Profit = 262+358 = $620
Annualized Return IF Exercised (ARIE) = 50.19%
(620/7642)*(365/59 Days)
Premium = 3.42%
This is my longest position, I wanted to be able to hold this stock as an investment, and capture the dividends that will be coming down the pipeline. So I went out to August because the premium for another month out was 2x what it was in the current month. I don't want to be called out of this position, so I will roll it if HPQ goes above my 40 strike.
6) 6-18-09 (22 Trading Days to Expiration)
Bought 300 shares of PALM @ $13.02
Sold to Open 3 July 14's @ $1.02
Return IF Stock is Called = 15.36%
Option Income (1.02*300) = $306
Stock Appreciation (14-13.02)*300 = $294
Net Profit = 306+294 = $600
Annualized Return IF Exercised (ARIE) = 193.33%
(600/3906)*(365/29 Days)
Premium = 7.83%
I got lucky, real lucky... (and even more below)
7) 6-08-09
Bought 500 Shares of PALM @ $11.86
Sold to Open 5 July 11's @ $2.00
Return IF Stock is Called = 9.61%
Option Income (2.00*500) = $1,000
Stock Appreciation (11-11.86)*500 = -$430
Net Profit = 1000-430 = $570
Annualized Return IF Exercised (ARIE) = 89.95%
(430/5930)*(365/39 Days)
Premium = 16.83%
1) 6-26-09 (16 Trading Days to Expiration)
Initial Transaction -- Bought 200 shares of CAT @ $34.52 = $6,904
Sold to Open 2 July 35's @ $1.03 = $206
Return IF Stock is Called = 4.37%
Option Income (1.03*200) = $206
Stock Appreciation (35-34.52)*200 = $96
Net Profit = 206+96 = $302
Annualized Return IF Exercised (ARIE) = 75.95%
(302/6904)*(365/21 Days)
Premium = 2.98%
(96/6904)
This was OTM, so I could have a chance to hand onto the stock for the dividend in a couple months. If I get called, I am fine with a 4.37% return over 16 trading days.
Initial Transaction -- Bought 300 shares of UNG @ $14.18 = $4254
Sold to Open 3 July 14's @ $0.93 = $279
Return IF Stock is Called = 5.28%
Option Income ($0.93*300) = $279
Stock Appreciation (14.00-14.18)*300 = -$54
Net Profit = 279+(-54) = $225
Annualized Return IF Exercised (ARIE) = 104.18%
(255/4254)*(365/21 Days)
Premium = 6.55%
(96/6904)
This seemed like a safe play with UNG trading near its 52-week low and the premium allows for decent downside protection.
2) 6-25-09 (17 Trading Days to Expiration)
Initial Transaction -- Bought 200 Shares of FDO @ $28.99 = $5798
Sold to Open 2 July 30's $0.88 = $176
Return IF Stock is Called = 6.51%
Option Income ($0.88*200) = $176
Stock Appreciation (30.00-28.99)*200 = $202
Net Profit = 176+202 = $378
Annualized Return IF Exercised (ARIE) = 108.16%
(378/5798)*(365/22 Days)
Premium = 3.03%
(96/6904)
Family Dollar has a solid financial base and is a stock I want to own, so I decided to go a little further OTM with the Call. Normally I like to keep the options either ATM or ITM, but these last few seem to be good investments.
3) 6-24-09 (18 Trading Days to Expiration)
Bought 400 Shares of AA @ $10.39
Sold to Open 4 July 10's @ $0.95
Return IF Stock is Called = 5.39%
Option Income (0.95*400) = $380
Stock Appreciation (10-10.39)*400 = -$156
Net Profit = 380-156 = $224
Annualized Return IF Exercised (ARIE) = 85.53%
(244/4146)*(365/23 Days)
Premium = 9.14%
I have had good luck with AA over the last couple months, so I decided to initiate another position.
Bought 300 Shares of GE @ $11.95
Sold to Open 3 July 12's @ $0.55
Return IF Stock is Called = 5.02%
Option Income (0.55*300) = $165
Stock Appreciation (12-11.95)*300 = $15
Net Profit = 165+15 = $180
Annualized Return IF Exercised (ARIE) = 79.67%
(180/3585)*(365/23 Days)
Premium = 4.60%
This trade was a little riskier for my taste, but I decided it was a small portion of my portfolio and there wasn't really any major news coming out that would shake this company.
4) 6-23-09 (19 Trading Days to Expiration)
Bought 300 Shares of NOK @ $14.21
Sold to Open 3 July 15's @ $0.37
Return IF Stock is Called = 8.16%
Option Income (0.37*300) = $111
Stock Appreciation (15-14.21)*300 = $237
Net Profit = 111+237 = $348
Annualized Return IF Exercised (ARIE) = 124.15%
(348/4263)*(365/24 Days)
Premium = 2.60%
5) 6-19-09 (21 Trading Days to Expiration)
Bought 200 shares of HPQ @ $38.21
Sold to Open 2 August 40's @ $1.31
Return IF Stock is Called = 8.11%
Option Income (1.31*200) = $262
Stock Appreciation (40-38.21)*200 = $358
Net Profit = 262+358 = $620
Annualized Return IF Exercised (ARIE) = 50.19%
(620/7642)*(365/59 Days)
Premium = 3.42%
This is my longest position, I wanted to be able to hold this stock as an investment, and capture the dividends that will be coming down the pipeline. So I went out to August because the premium for another month out was 2x what it was in the current month. I don't want to be called out of this position, so I will roll it if HPQ goes above my 40 strike.
6) 6-18-09 (22 Trading Days to Expiration)
Bought 300 shares of PALM @ $13.02
Sold to Open 3 July 14's @ $1.02
Return IF Stock is Called = 15.36%
Option Income (1.02*300) = $306
Stock Appreciation (14-13.02)*300 = $294
Net Profit = 306+294 = $600
Annualized Return IF Exercised (ARIE) = 193.33%
(600/3906)*(365/29 Days)
Premium = 7.83%
I got lucky, real lucky... (and even more below)
7) 6-08-09
Bought 500 Shares of PALM @ $11.86
Sold to Open 5 July 11's @ $2.00
Return IF Stock is Called = 9.61%
Option Income (2.00*500) = $1,000
Stock Appreciation (11-11.86)*500 = -$430
Net Profit = 1000-430 = $570
Annualized Return IF Exercised (ARIE) = 89.95%
(430/5930)*(365/39 Days)
Premium = 16.83%
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