Smarter Investing With Covered Calls

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2011-02-27T13:08:00.000-08:00

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Returns for positions that closed in Feb 2009 - Summary

2009-02-20T23:30:00.000-08:00

19 positions closed in Feb 2009. Here is the summary.

Total money invested - 352381
Total money collected - 366916
Gains - 14535
Percentage gains = 4.12%

The recent drop in banking sector did cause some damage. But not terribly bad overall.

Closed (WFT) February 2009 covered call position

2009-02-20T23:27:00.001-08:00

The (WFT) February 2009 covered calls position was closed on February 20, 2009. Here are the details.

Closing Transaction Date = 20090220
Opening Transaction Date = 20081226
Ticker = (WFT)
Opening Trade Details (Num shares, Price per share, Option strike price, Option premium, Initial investment) = (2000, 9.3, 7.5, 2.5, 13600.0)

The position was closed because options expired in the money and were called away.

Stock Leg (Sell)

Number of shares sold = 2000
Option strike price = 7.5
Total money received = 15000.0

Option Leg (Buy)

Call Symbol = WFTBP
Strike price = 7.5
Strike date = 20090220
Total money spent = 0.0

Return on investment

Initial investment = 13600.0
Absolute returns = 1400.0
Percentage returns = 10.29%

Detailed Calculations & Explanation

Stock Leg (Sell)
Money received = option strike price * number of shares
Money received = 7.5 * 2000 = 15000.0

Option Leg (Buy)
No need to close option position.
Money spent = 0

Transaction
Total money received = Money received - Money spent
Total money received = 15000.0 - 0.0 = 15000.0

ROI calculations
Absolute returns = Total money received - Initial investment
Absolute returns = 15000.0 - 13600.0 = 1400.0
Percentage returns = 100 * (Absolute Returns/Initial investment)
Percentage returns = 100 * (1400.0/13600.0) = 10.29%

The current portfolio details can be accessed here.

Disclaimer: The content of this blog is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Options involve risk and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options.

Closed (FMCN) February 2009 covered call position

2009-02-20T23:25:00.001-08:00

The (FMCN) February 2009 covered calls position was closed on February 20, 2009. Here are the details.

Closing Transaction Date = 20090220
Opening Transaction Date = 20090108
Ticker = (FMCN)
Opening Trade Details (Num shares, Price per share, Option strike price, Option premium, Initial investment) = (2000, 8.99, 7.5, 2.05, 13880.0)

The position was closed because options expired out of money.

Stock Leg (Sell)

Number of shares sold = 2000
Price per share = 7.18
Total money received = 14360.0

Option Leg (Buy)

Call Symbol = FUOBU
Strike price = 7.5
Strike date = 20090220
Total money spent = 0.0

Return on investment

Initial investment = 13880.0
Absolute returns = 480.0
Percentage returns = 3.45%

Detailed Calculations & Explanation

Stock Leg (Sell)
Money received = price per share * number of shares
Money received = 7.18 * 2000 = 14360.0

Option Leg (Buy)
No need to close option position.
Money spent = 0

Transaction
Total money received = Money received - Money spent
Total money received = 14360.0 - 0.0 = 14360.0

ROI calculations
Absolute returns = Total money received - Initial investment
Absolute returns = 14360.0 - 13880.0 = 480.0
Percentage returns = 100 * (Absolute Returns/Initial investment)
Percentage returns = 100 * (480.0/13880.0) = 3.45%

The current portfolio details can be accessed here.

Disclaimer: The content of this blog is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Options involve risk and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options.

Closed (FCX) February 2009 covered call position

2009-02-20T23:23:00.001-08:00

The (FCX) February 2009 covered calls position was closed on February 20, 2009. Here are the details.

Closing Transaction Date = 20090220
Opening Transaction Date = 20090108
Ticker = (FCX)
Opening Trade Details (Num shares, Price per share, Option strike price, Option premium, Initial investment) = (1000, 29.25, 25.0, 6.0, 23250.0)

The position was closed because options expired in the money and were called away.

Stock Leg (Sell)

Number of shares sold = 1000
Option strike price = 25.0
Total money received = 25000.0

Option Leg (Buy)

Call Symbol = FCXBE
Strike price = 25.0
Strike date = 20090220
Total money spent = 0.0

Return on investment

Initial investment = 23250.0
Absolute returns = 1750.0
Percentage returns = 7.52%

Detailed Calculations & Explanation

Stock Leg (Sell)
Money received = option strike price * number of shares
Money received = 25.0 * 1000 = 25000.0

Option Leg (Buy)
No need to close option position.
Money spent = 0

Transaction
Total money received = Money received - Money spent
Total money received = 25000.0 - 0.0 = 25000.0

ROI calculations
Absolute returns = Total money received - Initial investment
Absolute returns = 25000.0 - 23250.0 = 1750.0
Percentage returns = 100 * (Absolute Returns/Initial investment)
Percentage returns = 100 * (1750.0/23250.0) = 7.52%

The current portfolio details can be accessed here.

Disclaimer: The content of this blog is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Options involve risk and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options.

Closed (MCO) February 2009 covered call position

2009-02-20T23:21:00.001-08:00

The (MCO) February 2009 covered calls position was closed on February 20, 2009. Here are the details.

Closing Transaction Date = 20090220
Opening Transaction Date = 20081224
Ticker = (MCO)
Opening Trade Details (Num shares, Price per share, Option strike price, Option premium, Initial investment) = (1000, 20.88, 17.5, 4.9, 15980.0)

The position was closed because options expired in the money and were called away.

Stock Leg (Sell)

Number of shares sold = 1000
Option strike price = 17.5
Total money received = 17500.0

Option Leg (Buy)

Call Symbol = MCOBW
Strike price = 17.5
Strike date = 20090220
Total money spent = 0.0

Return on investment

Initial investment = 15980.0
Absolute returns = 1520.0
Percentage returns = 9.51%

Detailed Calculations & Explanation

Stock Leg (Sell)
Money received = option strike price * number of shares
Money received = 17.5 * 1000 = 17500.0

Option Leg (Buy)
No need to close option position.
Money spent = 0

Transaction
Total money received = Money received - Money spent
Total money received = 17500.0 - 0.0 = 17500.0

ROI calculations
Absolute returns = Total money received - Initial investment
Absolute returns = 17500.0 - 15980.0 = 1520.0
Percentage returns = 100 * (Absolute Returns/Initial investment)
Percentage returns = 100 * (1520.0/15980.0) = 9.51%

The current portfolio details can be accessed here.

Disclaimer: The content of this blog is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Options involve risk and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options.

Closed (JWN) February 2009 covered call position

2009-02-20T23:19:00.001-08:00

The (JWN) February 2009 covered calls position was closed on February 20, 2009. Here are the details.

Closing Transaction Date = 20090220
Opening Transaction Date = 20090109
Ticker = (JWN)
Opening Trade Details (Num shares, Price per share, Option strike price, Option premium, Initial investment) = (2000, 13.96, 12.5, 2.45, 23020.0)

The position was closed because options expired out of money.

Stock Leg (Sell)

Number of shares sold = 2000
Price per share = 11.89
Total money received = 23780.0

Option Leg (Buy)

Call Symbol = JWNBV
Strike price = 12.5
Strike date = 20090220
Total money spent = 0.0

Return on investment

Initial investment = 23020.0
Absolute returns = 760.0
Percentage returns = 3.3%

Detailed Calculations & Explanation

Stock Leg (Sell)
Money received = price per share * number of shares
Money received = 11.89 * 2000 = 23780.0

Option Leg (Buy)
No need to close option position.
Money spent = 0

Transaction
Total money received = Money received - Money spent
Total money received = 23780.0 - 0.0 = 23780.0

ROI calculations
Absolute returns = Total money received - Initial investment
Absolute returns = 23780.0 - 23020.0 = 760.0
Percentage returns = 100 * (Absolute Returns/Initial investment)
Percentage returns = 100 * (760.0/23020.0) = 3.3%

The current portfolio details can be accessed here.

Disclaimer: The content of this blog is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Options involve risk and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options.

Closed (TSO) February 2009 covered call position

2009-02-20T23:17:00.001-08:00

The (TSO) February 2009 covered calls position was closed on February 20, 2009. Here are the details.

Closing Transaction Date = 20090220
Opening Transaction Date = 20081224
Ticker = (TSO)
Opening Trade Details (Num shares, Price per share, Option strike price, Option premium, Initial investment) = (2000, 11.89, 10.0, 2.9, 17980.0)

The position was closed because options expired in the money and were called away.

Stock Leg (Sell)

Number of shares sold = 2000
Option strike price = 10.0
Total money received = 20000.0

Option Leg (Buy)

Call Symbol = TSOBY
Strike price = 10.0
Strike date = 20090220
Total money spent = 0.0

Return on investment

Initial investment = 17980.0
Absolute returns = 2020.0
Percentage returns = 11.23%

Detailed Calculations & Explanation

Stock Leg (Sell)
Money received = option strike price * number of shares
Money received = 10.0 * 2000 = 20000.0

Option Leg (Buy)
No need to close option position.
Money spent = 0

Transaction
Total money received = Money received - Money spent
Total money received = 20000.0 - 0.0 = 20000.0

ROI calculations
Absolute returns = Total money received - Initial investment
Absolute returns = 20000.0 - 17980.0 = 2020.0
Percentage returns = 100 * (Absolute Returns/Initial investment)
Percentage returns = 100 * (2020.0/17980.0) = 11.23%

The current portfolio details can be accessed here.

Disclaimer: The content of this blog is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Options involve risk and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options.

Closed (ICE) February 2009 covered call position

2009-02-20T23:15:00.001-08:00

The (ICE) February 2009 covered calls position was closed on February 20, 2009. Here are the details.

Closing Transaction Date = 20090220
Opening Transaction Date = 20090107
Ticker = (ICE)
Opening Trade Details (Num shares, Price per share, Option strike price, Option premium, Initial investment) = (400, 64.08, 55.0, 13.4, 20272.0)

The position was closed because options expired in the money and were called away.

Stock Leg (Sell)

Number of shares sold = 400
Option strike price = 55.0
Total money received = 22000.0

Option Leg (Buy)

Call Symbol = ICEBK
Strike price = 55.0
Strike date = 20090220
Total money spent = 0.0

Return on investment

Initial investment = 20272.0
Absolute returns = 1728.0
Percentage returns = 8.52%

Detailed Calculations & Explanation

Stock Leg (Sell)
Money received = option strike price * number of shares
Money received = 55.0 * 400 = 22000.0

Option Leg (Buy)
No need to close option position.
Money spent = 0

Transaction
Total money received = Money received - Money spent
Total money received = 22000.0 - 0.0 = 22000.0

ROI calculations
Absolute returns = Total money received - Initial investment
Absolute returns = 22000.0 - 20272.0 = 1728.0
Percentage returns = 100 * (Absolute Returns/Initial investment)
Percentage returns = 100 * (1728.0/20272.0) = 8.52%

The current portfolio details can be accessed here.

Disclaimer: The content of this blog is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Options involve risk and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options.

Closed (AMZN) February 2009 covered call position

2009-02-20T23:12:00.001-08:00

The (AMZN) February 2009 covered calls position was closed on February 20, 2009. Here are the details.

Closing Transaction Date = 20090220
Opening Transaction Date = 20090129
Ticker = (AMZN)
Opening Trade Details (Num shares, Price per share, Option strike price, Option premium, Initial investment) = (600, 50.0, 45.0, 7.1, 25740.0)

The position was closed because options expired in the money and were called away.

Stock Leg (Sell)

Number of shares sold = 600
Option strike price = 45.0
Total money received = 27000.0

Option Leg (Buy)

Call Symbol = ZQNBI
Strike price = 45.0
Strike date = 20090220
Total money spent = 0.0

Return on investment

Initial investment = 25740.0
Absolute returns = 1260.0
Percentage returns = 4.89%

Detailed Calculations & Explanation

Stock Leg (Sell)
Money received = option strike price * number of shares
Money received = 45.0 * 600 = 27000.0

Option Leg (Buy)
No need to close option position.
Money spent = 0

Transaction
Total money received = Money received - Money spent
Total money received = 27000.0 - 0.0 = 27000.0

ROI calculations
Absolute returns = Total money received - Initial investment
Absolute returns = 27000.0 - 25740.0 = 1260.0
Percentage returns = 100 * (Absolute Returns/Initial investment)
Percentage returns = 100 * (1260.0/25740.0) = 4.89%

The current portfolio details can be accessed here.

Disclaimer: The content of this blog is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Options involve risk and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options.

Closed (PLD) February 2009 covered call position

2009-02-20T23:08:00.001-08:00

The (PLD) February 2009 covered calls position was closed on February 20, 2009. Here are the details.

Closing Transaction Date = 20090220
Opening Transaction Date = 20081230
Ticker = (PLD)
Opening Trade Details (Num shares, Price per share, Option strike price, Option premium, Initial investment) = (2000, 12.36, 10.0, 3.5, 17720.0)

The position was closed because options expired out of money.

Stock Leg (Sell)

Number of shares sold = 2000
Price per share = 6.93
Total money received = 13860.0

Option Leg (Buy)

Call Symbol = PADBB
Strike price = 10.0
Strike date = 20090220
Total money spent = 0.0

Return on investment

Initial investment = 17720.0
Absolute returns = -3860.0
Percentage returns = -21.78%

Detailed Calculations & Explanation

Stock Leg (Sell)
Money received = price per share * number of shares
Money received = 6.93 * 2000 = 13860.0

Option Leg (Buy)
No need to close option position.
Money spent = 0

Transaction
Total money received = Money received - Money spent
Total money received = 13860.0 - 0.0 = 13860.0

ROI calculations
Absolute returns = Total money received - Initial investment
Absolute returns = 13860.0 - 17720.0 = -3860.0
Percentage returns = 100 * (Absolute Returns/Initial investment)
Percentage returns = 100 * (-3860.0/17720.0) = -21.78%

The current portfolio details can be accessed here.

Disclaimer: The content of this blog is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Options involve risk and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options.

Closed (CNX) February 2009 covered call position

2009-02-20T23:06:00.001-08:00

The (CNX) February 2009 covered calls position was closed on February 20, 2009. Here are the details.

Closing Transaction Date = 20090220
Opening Transaction Date = 20090105
Ticker = (CNX)
Opening Trade Details (Num shares, Price per share, Option strike price, Option premium, Initial investment) = (800, 34.87, 30.0, 7.2, 22136.0)

The position was closed because options expired out of money.

Stock Leg (Sell)

Number of shares sold = 800
Price per share = 27.23
Total money received = 21784.0

Option Leg (Buy)

Call Symbol = CNXBF
Strike price = 30.0
Strike date = 20090220
Total money spent = 0.0

Return on investment

Initial investment = 22136.0
Absolute returns = -352.0
Percentage returns = -1.59%

Detailed Calculations & Explanation

Stock Leg (Sell)
Money received = price per share * number of shares
Money received = 27.23 * 800 = 21784.0

Option Leg (Buy)
No need to close option position.
Money spent = 0

Transaction
Total money received = Money received - Money spent
Total money received = 21784.0 - 0.0 = 21784.0

ROI calculations
Absolute returns = Total money received - Initial investment
Absolute returns = 21784.0 - 22136.0 = -352.0
Percentage returns = 100 * (Absolute Returns/Initial investment)
Percentage returns = 100 * (-352.0/22136.0) = -1.59%

The current portfolio details can be accessed here.

Disclaimer: The content of this blog is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Options involve risk and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options.

Closed (SNDK) February 2009 covered call position

2009-02-20T23:03:00.001-08:00

The (SNDK) February 2009 covered calls position was closed on February 20, 2009. Here are the details.

Closing Transaction Date = 20090220
Opening Transaction Date = 20090109
Ticker = (SNDK)
Opening Trade Details (Num shares, Price per share, Option strike price, Option premium, Initial investment) = (2000, 12.3, 11.0, 2.42, 19760.0)

The position was closed because options expired out of money.

Stock Leg (Sell)

Number of shares sold = 2000
Price per share = 9.36
Total money received = 18720.0

Option Leg (Buy)

Call Symbol = SWQBM
Strike price = 11.0
Strike date = 20090220
Total money spent = 0.0

Return on investment

Initial investment = 19760.0
Absolute returns = -1040.0
Percentage returns = -5.26%

Detailed Calculations & Explanation

Stock Leg (Sell)
Money received = price per share * number of shares
Money received = 9.36 * 2000 = 18720.0

Option Leg (Buy)
No need to close option position.
Money spent = 0

Transaction
Total money received = Money received - Money spent
Total money received = 18720.0 - 0.0 = 18720.0

ROI calculations
Absolute returns = Total money received - Initial investment
Absolute returns = 18720.0 - 19760.0 = -1040.0
Percentage returns = 100 * (Absolute Returns/Initial investment)
Percentage returns = 100 * (-1040.0/19760.0) = -5.26%

The current portfolio details can be accessed here.

Disclaimer: The content of this blog is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Options involve risk and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options.

Closed (M) February 2009 covered call position

2009-02-20T22:53:00.001-08:00

The (M) February 2009 covered calls position was closed on February 20, 2009. Here are the details.

Closing Transaction Date = 20090220
Opening Transaction Date = 20081229
Ticker = (M)
Opening Trade Details (Num shares, Price per share, Option strike price, Option premium, Initial investment) = (2000, 8.89, 7.5, 2.2, 13380.0)

The position was closed because options expired in the money and were called away.

Stock Leg (Sell)

Number of shares sold = 2000
Option strike price = 7.5
Total money received = 15000.0

Option Leg (Buy)

Call Symbol = MBU
Strike price = 7.5
Strike date = 20090220
Total money spent = 0.0

Return on investment

Initial investment = 13380.0
Absolute returns = 1620.0
Percentage returns = 12.1%

Detailed Calculations & Explanation

Stock Leg (Sell)
Money received = option strike price * number of shares
Money received = 7.5 * 2000 = 15000.0

Option Leg (Buy)
No need to close option position.
Money spent = 0

Transaction
Total money received = Money received - Money spent
Total money received = 15000.0 - 0.0 = 15000.0

ROI calculations
Absolute returns = Total money received - Initial investment
Absolute returns = 15000.0 - 13380.0 = 1620.0
Percentage returns = 100 * (Absolute Returns/Initial investment)
Percentage returns = 100 * (1620.0/13380.0) = 12.1%

The current portfolio details can be accessed here.

Disclaimer: The content of this blog is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Options involve risk and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options.

Closed (WFR) February 2009 covered call position

2009-02-20T22:51:00.001-08:00

The (WFR) February 2009 covered calls position was closed on February 20, 2009. Here are the details.

Closing Transaction Date = 20090220
Opening Transaction Date = 20090113
Ticker = (WFR)
Opening Trade Details (Num shares, Price per share, Option strike price, Option premium, Initial investment) = (2000, 14.78, 12.5, 3.2, 23160.0)

The position was closed because options expired in the money and were called away.

Stock Leg (Sell)

Number of shares sold = 2000
Option strike price = 12.5
Total money received = 25000.0

Option Leg (Buy)

Call Symbol = CJCBV
Strike price = 12.5
Strike date = 20090220
Total money spent = 0.0

Return on investment

Initial investment = 23160.0
Absolute returns = 1840.0
Percentage returns = 7.94%

Detailed Calculations & Explanation

Stock Leg (Sell)
Money received = option strike price * number of shares
Money received = 12.5 * 2000 = 25000.0

Option Leg (Buy)
No need to close option position.
Money spent = 0

Transaction
Total money received = Money received - Money spent
Total money received = 25000.0 - 0.0 = 25000.0

ROI calculations
Absolute returns = Total money received - Initial investment
Absolute returns = 25000.0 - 23160.0 = 1840.0
Percentage returns = 100 * (Absolute Returns/Initial investment)
Percentage returns = 100 * (1840.0/23160.0) = 7.94%

The current portfolio details can be accessed here.

Disclaimer: The content of this blog is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Options involve risk and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options.

Closed (AKS) February 2009 covered call position

2009-02-20T22:49:00.001-08:00

The (AKS) February 2009 covered calls position was closed on February 20, 2009. Here are the details.

Closing Transaction Date = 20090220
Opening Transaction Date = 20081230
Ticker = (AKS)
Opening Trade Details (Num shares, Price per share, Option strike price, Option premium, Initial investment) = (2000, 8.85, 7.5, 2.2, 13300.0)

The position was closed because options expired out of money.

Stock Leg (Sell)

Number of shares sold = 2000
Price per share = 6.9
Total money received = 13800.0

Option Leg (Buy)

Call Symbol = ASJBU
Strike price = 7.5
Strike date = 20090220
Total money spent = 0.0

Return on investment

Initial investment = 13300.0
Absolute returns = 500.0
Percentage returns = 3.75%

Detailed Calculations & Explanation

Stock Leg (Sell)
Money received = price per share * number of shares
Money received = 6.9 * 2000 = 13800.0

Option Leg (Buy)
No need to close option position.
Money spent = 0

Transaction
Total money received = Money received - Money spent
Total money received = 13800.0 - 0.0 = 13800.0

ROI calculations
Absolute returns = Total money received - Initial investment
Absolute returns = 13800.0 - 13300.0 = 500.0
Percentage returns = 100 * (Absolute Returns/Initial investment)
Percentage returns = 100 * (500.0/13300.0) = 3.75%

The current portfolio details can be accessed here.

Disclaimer: The content of this blog is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Options involve risk and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options.

Closed (MET) February 2009 covered call position

2009-02-20T22:47:00.001-08:00

The (MET) February 2009 covered calls position was closed on February 20, 2009. Here are the details.

Closing Transaction Date = 20090220
Opening Transaction Date = 20090120
Ticker = (MET)
Opening Trade Details (Num shares, Price per share, Option strike price, Option premium, Initial investment) = (1000, 23.82, 20.0, 5.6, 18220.0)

The position was closed because options expired in the money and were called away.

Stock Leg (Sell)

Number of shares sold = 1000
Option strike price = 20.0
Total money received = 20000.0

Option Leg (Buy)

Call Symbol = METBD
Strike price = 20.0
Strike date = 20090220
Total money spent = 0.0

Return on investment

Initial investment = 18220.0
Absolute returns = 1780.0
Percentage returns = 9.76%

Detailed Calculations & Explanation

Stock Leg (Sell)
Money received = option strike price * number of shares
Money received = 20.0 * 1000 = 20000.0

Option Leg (Buy)
No need to close option position.
Money spent = 0

Transaction
Total money received = Money received - Money spent
Total money received = 20000.0 - 0.0 = 20000.0

ROI calculations
Absolute returns = Total money received - Initial investment
Absolute returns = 20000.0 - 18220.0 = 1780.0
Percentage returns = 100 * (Absolute Returns/Initial investment)
Percentage returns = 100 * (1780.0/18220.0) = 9.76%

The current portfolio details can be accessed here.

Disclaimer: The content of this blog is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Options involve risk and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options.

Closed (AAPL) February 2009 covered call position

2009-02-20T21:42:00.001-08:00

The (AAPL) February 2009 covered calls position was closed on February 20, 2009. Here are the details.

Closing Transaction Date = 20090220
Opening Transaction Date = 20090121
Ticker = (AAPL)
Opening Trade Details (Num shares, Price per share, Option strike price, Option premium, Initial investment) = (300, 82.83, 80.0, 7.4, 22629.0)

The position was closed because options expired in the money and were called away.

Stock Leg (Sell)

Number of shares sold = 300
Option strike price = 80.0
Total money received = 24000.0

Option Leg (Buy)

Call Symbol = QAABP
Strike price = 80.0
Strike date = 20090220
Total money spent = 0.0

Return on investment

Initial investment = 22629.0
Absolute returns = 1371.0
Percentage returns = 6.05%

Detailed Calculations & Explanation

Stock Leg (Sell)
Money received = option strike price * number of shares
Money received = 80.0 * 300 = 24000.0

Option Leg (Buy)
No need to close option position.
Money spent = 0

Transaction
Total money received = Money received - Money spent
Total money received = 24000.0 - 0.0 = 24000.0

ROI calculations
Absolute returns = Total money received - Initial investment
Absolute returns = 24000.0 - 22629.0 = 1371.0
Percentage returns = 100 * (Absolute Returns/Initial investment)
Percentage returns = 100 * (1371.0/22629.0) = 6.05%

The current portfolio details can be accessed here.

Disclaimer: The content of this blog is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Options involve risk and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options.

Closed (AVB) February 2009 covered call position

2009-02-20T21:40:00.001-08:00

The (AVB) February 2009 covered calls position was closed on February 20, 2009. Here are the details.

Closing Transaction Date = 20090220
Opening Transaction Date = 20090102
Ticker = (AVB)
Opening Trade Details (Num shares, Price per share, Option strike price, Option premium, Initial investment) = (400, 61.26, 50.0, 15.2, 18424.0)

The position was closed because options expired out of money.

Stock Leg (Sell)

Number of shares sold = 400
Price per share = 44.03
Total money received = 17612.0

Option Leg (Buy)

Call Symbol = AZBBJ
Strike price = 50.0
Strike date = 20090220
Total money spent = 0.0

Return on investment

Initial investment = 18424.0
Absolute returns = -812.0
Percentage returns = -4.4%

Detailed Calculations & Explanation

Stock Leg (Sell)
Money received = price per share * number of shares
Money received = 44.03 * 400 = 17612.0

Option Leg (Buy)
No need to close option position.
Money spent = 0

Transaction
Total money received = Money received - Money spent
Total money received = 17612.0 - 0.0 = 17612.0

ROI calculations
Absolute returns = Total money received - Initial investment
Absolute returns = 17612.0 - 18424.0 = -812.0
Percentage returns = 100 * (Absolute Returns/Initial investment)
Percentage returns = 100 * (-812.0/18424.0) = -4.4%

The current portfolio details can be accessed here.

Disclaimer: The content of this blog is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Options involve risk and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options.

Closed (CHK) February 2009 covered call position

2009-02-20T21:36:00.001-08:00

The (CHK) February 2009 covered calls position was closed on February 20, 2009. Here are the details.

Closing Transaction Date = 20090220
Opening Transaction Date = 20090102
Ticker = (CHK)
Opening Trade Details (Num shares, Price per share, Option strike price, Option premium, Initial investment) = (1000, 16.92, 15.0, 3.1, 13820.0)

The position was closed because options expired in the money and were called away.

Stock Leg (Sell)

Number of shares sold = 1000
Option strike price = 15.0
Total money received = 15000.0

Option Leg (Buy)

Call Symbol = CHKBC
Strike price = 15.0
Strike date = 20090220
Total money spent = 0.0

Return on investment

Initial investment = 13820.0
Absolute returns = 1180.0
Percentage returns = 8.53%

Detailed Calculations & Explanation

Stock Leg (Sell)
Money received = option strike price * number of shares
Money received = 15.0 * 1000 = 15000.0

Option Leg (Buy)
No need to close option position.
Money spent = 0

Transaction
Total money received = Money received - Money spent
Total money received = 15000.0 - 0.0 = 15000.0

ROI calculations
Absolute returns = Total money received - Initial investment
Absolute returns = 15000.0 - 13820.0 = 1180.0
Percentage returns = 100 * (Absolute Returns/Initial investment)
Percentage returns = 100 * (1180.0/13820.0) = 8.53%

The current portfolio details can be accessed here.

Disclaimer: The content of this blog is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Options involve risk and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options.

Closed (NOV) February 2009 covered call position

2009-02-20T21:34:00.001-08:00

The (NOV) February 2009 covered calls position was closed on February 20, 2009. Here are the details.

Closing Transaction Date = 20090220
Opening Transaction Date = 20081223
Ticker = (NOV)
Opening Trade Details (Num shares, Price per share, Option strike price, Option premium, Initial investment) = (1000, 22.21, 17.5, 6.1, 16110.0)

The position was closed because options expired in the money and were called away.

Stock Leg (Sell)

Number of shares sold = 1000
Option strike price = 17.5
Total money received = 17500.0

Option Leg (Buy)

Call Symbol = NOVBW
Strike price = 17.5
Strike date = 20090220
Total money spent = 0.0

Return on investment

Initial investment = 16110.0
Absolute returns = 1390.0
Percentage returns = 8.62%

Detailed Calculations & Explanation

Stock Leg (Sell)
Money received = option strike price * number of shares
Money received = 17.5 * 1000 = 17500.0

Option Leg (Buy)
No need to close option position.
Money spent = 0

Transaction
Total money received = Money received - Money spent
Total money received = 17500.0 - 0.0 = 17500.0

ROI calculations
Absolute returns = Total money received - Initial investment
Absolute returns = 17500.0 - 16110.0 = 1390.0
Percentage returns = 100 * (Absolute Returns/Initial investment)
Percentage returns = 100 * (1390.0/16110.0) = 8.62%

The current portfolio details can be accessed here.

Disclaimer: The content of this blog is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Options involve risk and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options.

Opened (BAC) March 2009 covered call position for BK OF AMERICA CP

2009-02-11T20:13:00.001-08:00

A new covered calls position was established on February 11, 2009 with purchase of 5000 shares of "BK OF AMERICA CP" (BAC). Here are the details.

Transaction Date = 20090211
Ticker = (BAC)
Company Name = BK OF AMERICA CP

Stock Leg (Buy)

Number of shares purchased = 5000
Price per share = 6.07
Total money spent = 30350.0

Option Leg (Sell)

Call Symbol = BYOCD
Number of sold calls = 50
Strike price = 4.0
Strike date = 20090320
Call premium = 2.49
Total money received = 12450.0
Max. days for which position may stay open = 38

Return on investment (If calls are exercised)

Initial investment = 17900.0
Absolute return = 2100.0
Percentage return = 11.73%
Annualized percentage return = 112.66%

Break even Information

Break even price point = 3.58
Break even buffer percentage = 41.02%

Detailed Calculations & Explanation

Stock Leg (Buy)
Total money spent = price per share * number of shares
Total money spent = 6.07 * 5000 = 30350.0

Option Leg (Sell)
Total money received = number of sold calls * 100 * call premium
Total money received = 50 * 100 * 2.49 = 12450.0

Transaction
Initial investment = Total money spent - Total money received
Initial investment = 30350.0 - 12450.0 = 17900.0

ROI calculations (If calls get exercised)
Money received upon exercise = (number of sold calls * 100 * strike price)
Money received upon exercise = 50 * 100 * 4.0 = 20000.0
Absolute returns = Money received upon exercise - Initial investment
Absolute returns = 20000.0 - 17900.0 = 2100.0
Percentage returns = 100 * (Absolute Returns/Initial investment)
Percentage returns = 100 * (2100.0/17900.0) = 11.73%
Annualized percentage returns = Percentage returns * 365/Max. days for which position may stay open
Annualized percentage returns = 11.73 * 365/38 = 112.66%

Break Even Information
Break-even point = Initial investment / Number of shares
Break-even point = 17900.0 / 5000 = 3.58
Break-even buffer percentage = 100 * (Current price - Break-even point) / Current price
Break-even buffer percentage = 100 * (6.07 - 3.58) / 6.07 = 41.02%
This means that this position can weather a 41.02% drop in stock's price before losing any money.

The position will be watched closely and liquidated if it starts to hover around the break even point. A fall in the stock price till the strike price is expected to be compensated linearly by corresponding fall in the option's premium (thereby maintaining a balance and avoiding drastic losses if liquidity is desired).

The current portfolio details can be accessed here.

Disclaimer: The content of this blog is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Options involve risk and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options.

Opened (TXT) March 2009 covered call position for TEXTRON INC

2009-02-11T20:10:00.001-08:00

A new covered calls position was established on February 11, 2009 with purchase of 4000 shares of "TEXTRON INC" (TXT). Here are the details.

Transaction Date = 20090211
Ticker = (TXT)
Company Name = TEXTRON INC

Stock Leg (Buy)

Number of shares purchased = 4000
Price per share = 6.76
Total money spent = 27040.0

Option Leg (Sell)

Call Symbol = TXYCA
Number of sold calls = 40
Strike price = 5.0
Strike date = 20090320
Call premium = 2.25
Total money received = 9000.0
Max. days for which position may stay open = 38

Return on investment (If calls are exercised)

Initial investment = 18040.0
Absolute return = 1960.0
Percentage return = 10.86%
Annualized percentage return = 104.31%

Break even Information

Break even price point = 4.51
Break even buffer percentage = 33.28%

Detailed Calculations & Explanation

Stock Leg (Buy)
Total money spent = price per share * number of shares
Total money spent = 6.76 * 4000 = 27040.0

Option Leg (Sell)
Total money received = number of sold calls * 100 * call premium
Total money received = 40 * 100 * 2.25 = 9000.0

Transaction
Initial investment = Total money spent - Total money received
Initial investment = 27040.0 - 9000.0 = 18040.0

ROI calculations (If calls get exercised)
Money received upon exercise = (number of sold calls * 100 * strike price)
Money received upon exercise = 40 * 100 * 5.0 = 20000.0
Absolute returns = Money received upon exercise - Initial investment
Absolute returns = 20000.0 - 18040.0 = 1960.0
Percentage returns = 100 * (Absolute Returns/Initial investment)
Percentage returns = 100 * (1960.0/18040.0) = 10.86%
Annualized percentage returns = Percentage returns * 365/Max. days for which position may stay open
Annualized percentage returns = 10.86 * 365/38 = 104.31%

Break Even Information
Break-even point = Initial investment / Number of shares
Break-even point = 18040.0 / 4000 = 4.51
Break-even buffer percentage = 100 * (Current price - Break-even point) / Current price
Break-even buffer percentage = 100 * (6.76 - 4.51) / 6.76 = 33.28%
This means that this position can weather a 33.28% drop in stock's price before losing any money.

The position will be watched closely and liquidated if it starts to hover around the break even point. A fall in the stock price till the strike price is expected to be compensated linearly by corresponding fall in the option's premium (thereby maintaining a balance and avoiding drastic losses if liquidity is desired).

The current portfolio details can be accessed here.

Disclaimer: The content of this blog is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Options involve risk and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options.

Opened (STT) March 2009 covered call position for STATE STREET CP

2009-02-02T22:18:00.001-08:00

A new covered calls position was established on February 2, 2009 with purchase of 1000 shares of "STATE STREET CP" (STT). Here are the details.

Transaction Date = 20090202
Ticker = (STT)
Company Name = STATE STREET CP

Stock Leg (Buy)

Number of shares purchased = 1000
Price per share = 23.51
Total money spent = 23510.0

Option Leg (Sell)

Call Symbol = STTCW
Number of sold calls = 10
Strike price = 17.5
Strike date = 20090320
Call premium = 7.4
Total money received = 7400.0
Max. days for which position may stay open = 47

Return on investment (If calls are exercised)

Initial investment = 16110.0
Absolute return = 1390.0
Percentage return = 8.62%
Annualized percentage return = 66.94%

Break even Information

Break even price point = 16.11
Break even buffer percentage = 31.47%

Detailed Calculations & Explanation

Stock Leg (Buy)
Total money spent = price per share * number of shares
Total money spent = 23.51 * 1000 = 23510.0

Option Leg (Sell)
Total money received = number of sold calls * 100 * call premium
Total money received = 10 * 100 * 7.4 = 7400.0

Transaction
Initial investment = Total money spent - Total money received
Initial investment = 23510.0 - 7400.0 = 16110.0

ROI calculations (If calls get exercised)
Money received upon exercise = (number of sold calls * 100 * strike price)
Money received upon exercise = 10 * 100 * 17.5 = 17500.0
Absolute returns = Money received upon exercise - Initial investment
Absolute returns = 17500.0 - 16110.0 = 1390.0
Percentage returns = 100 * (Absolute Returns/Initial investment)
Percentage returns = 100 * (1390.0/16110.0) = 8.62%
Annualized percentage returns = Percentage returns * 365/Max. days for which position may stay open
Annualized percentage returns = 8.62 * 365/47 = 66.94%

Break Even Information
Break-even point = Initial investment / Number of shares
Break-even point = 16110.0 / 1000 = 16.11
Break-even buffer percentage = 100 * (Current price - Break-even point) / Current price
Break-even buffer percentage = 100 * (23.51 - 16.11) / 23.51 = 31.47%
This means that this position can weather a 31.47% drop in stock's price before losing any money.

The position will be watched closely and liquidated if it starts to hover around the break even point. A fall in the stock price till the strike price is expected to be compensated linearly by corresponding fall in the option's premium (thereby maintaining a balance and avoiding drastic losses if liquidity is desired).

The current portfolio details can be accessed here.

Disclaimer: The content of this blog is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Options involve risk and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options.

Opened (BAC) March 2009 covered call position for BK OF AMERICA CP

2009-02-02T22:11:00.000-08:00

A new covered calls position was established on February 2, 2009 with purchase of 4000 shares of "BK OF AMERICA CP" (BAC). Here are the details.

Transaction Date = 20090202
Ticker = (BAC)
Company Name = BK OF AMERICA CP

Stock Leg (Buy)

Number of shares purchased = 4000
Price per share = 6.0
Total money spent = 24000.0

Option Leg (Sell)

Call Symbol = BYOCD
Number of sold calls = 40
Strike price = 4.0
Strike date = 20090320
Call premium = 2.51
Total money received = 10040.0
Max. days for which position may stay open = 47

Return on investment (If calls are exercised)

Initial investment = 13960.0
Absolute return = 2040.0
Percentage return = 14.61%
Annualized percentage return = 113.46%

Break even Information

Break even price point = 3.49
Break even buffer percentage = 41.83%

Detailed Calculations & Explanation

Stock Leg (Buy)
Total money spent = price per share * number of shares
Total money spent = 6.0 * 4000 = 24000.0

Option Leg (Sell)
Total money received = number of sold calls * 100 * call premium
Total money received = 40 * 100 * 2.51 = 10040.0

Transaction
Initial investment = Total money spent - Total money received
Initial investment = 24000.0 - 10040.0 = 13960.0

ROI calculations (If calls get exercised)
Money received upon exercise = (number of sold calls * 100 * strike price)
Money received upon exercise = 40 * 100 * 4.0 = 16000.0
Absolute returns = Money received upon exercise - Initial investment
Absolute returns = 16000.0 - 13960.0 = 2040.0
Percentage returns = 100 * (Absolute Returns/Initial investment)
Percentage returns = 100 * (2040.0/13960.0) = 14.61%
Annualized percentage returns = Percentage returns * 365/Max. days for which position may stay open
Annualized percentage returns = 14.61 * 365/47 = 113.46%

Break Even Information
Break-even point = Initial investment / Number of shares
Break-even point = 13960.0 / 4000 = 3.49
Break-even buffer percentage = 100 * (Current price - Break-even point) / Current price
Break-even buffer percentage = 100 * (6.0 - 3.49) / 6.0 = 41.83%
This means that this position can weather a 41.83% drop in stock's price before losing any money.

The position will be watched closely and liquidated if it starts to hover around the break even point. A fall in the stock price till the strike price is expected to be compensated linearly by corresponding fall in the option's premium (thereby maintaining a balance and avoiding drastic losses if liquidity is desired).

The current portfolio details can be accessed here.

Disclaimer: The content of this blog is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Options involve risk and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options.

Good suggestions

2009-01-31T16:05:00.000-08:00

Check these out. These points really do make a lot of sense. We are treading in a really uncertain territory here and although that happens to be a rich area for option traders, if not done properly, you can get burned easily.
By following a few simple rules, we can try our best to minimize damage.

Good rules to follow.

Jan 2009 Portfolio Performance Report - Summary

2009-01-30T20:04:00.000-08:00

Here is the status of the portfolio at the end of Jan 2009.

Portfolio Details

Inception date = 20081222
Period start date = 20090101
Period end date = 20090131
Portfolio value at start = 100000
Free cash at end of period = 372345
Value of open positions at end = 631443
Total Value at end = Cash at end + Value of open positions = 1003788

Return

Jan 2009 Return = 0.38%
Percentage return since inception = 0.38%

The current portfolio value reports can be accessed here.

Opened (BAC) March 2009 covered call position for BK OF AMERICA CP

2009-01-29T21:30:00.000-08:00

A new covered calls position was established on January 29, 2009 with purchase of 3000 shares of "BK OF AMERICA CP" (BAC). Here are the details.

Transaction Date = 20090129
Ticker = (BAC)
Company Name = BK OF AMERICA CP

Stock Leg (Buy)

Number of shares purchased = 3000
Price per share = 6.78
Total money spent = 20340.0

Option Leg (Sell)

Call Symbol = BYOCE
Number of sold calls = 30
Strike price = 5.0
Strike date = 20090320
Call premium = 2.4
Total money received = 7200.0005
Max. days for which position may stay open = 51

Return on investment (If calls are exercised)

Initial investment = 13140.0
Absolute return = 1860.0
Percentage return = 14.15%
Annualized percentage return = 101.26%

Break even Information

Break even price point = 4.38
Break even buffer percentage = 35.39%

Detailed Calculations & Explanation

Stock Leg (Buy)
Total money spent = price per share * number of shares
Total money spent = 6.78 * 3000 = 20340.0

Option Leg (Sell)
Total money received = number of sold calls * 100 * call premium
Total money received = 30 * 100 * 2.4 = 7200.0005

Transaction
Initial investment = Total money spent - Total money received
Initial investment = 20340.0 - 7200.0005 = 13140.0

ROI calculations (If calls get exercised)
Money received upon exercise = (number of sold calls * 100 * strike price)
Money received upon exercise = 30 * 100 * 5.0 = 15000.0
Absolute returns = Money received upon exercise - Initial investment
Absolute returns = 15000.0 - 13140.0 = 1860.0
Percentage returns = 100 * (Absolute Returns/Initial investment)
Percentage returns = 100 * (1860.0/13140.0) = 14.15%
Annualized percentage returns = Percentage returns * 365/Max. days for which position may stay open
Annualized percentage returns = 14.15 * 365/51 = 101.26%

Break Even Information
Break-even point = Initial investment / Number of shares
Break-even point = 13140.0 / 3000 = 4.38
Break-even buffer percentage = 100 * (Current price - Break-even point) / Current price
Break-even buffer percentage = 100 * (6.78 - 4.38) / 6.78 = 35.39%
This means that this position can weather a 35.39% drop in stock's price before losing any money.

The position will be watched closely and liquidated if it starts to hover around the break even point. A fall in the stock price till the strike price is expected to be compensated linearly by corresponding fall in the option's premium (thereby maintaining a balance and avoiding drastic losses if liquidity is desired).

The current portfolio details can be accessed here.

Disclaimer: The content of this blog is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Options involve risk and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options.

Opened (PRU) June 2009 covered call position for PRUDENTIAL FINCL

2009-01-29T21:23:00.001-08:00

A new covered calls position was established on January 29, 2009 with purchase of 1500 shares of "PRUDENTIAL FINCL " (PRU). Here are the details.

Transaction Date = 20090129
Ticker = (PRU)
Company Name = PRUDENTIAL FINCL

Stock Leg (Buy)

Number of shares purchased = 1500
Price per share = 28.62
Total money spent = 42930.0

Option Leg (Sell)

Call Symbol = PRUFX
Number of sold calls = 15
Strike price = 20.0
Strike date = 20090619
Call premium = 12.4
Total money received = 18600.0
Max. days for which position may stay open = 142

Return on investment (If calls are exercised)

Initial investment = 24330.0
Absolute return = 5670.0
Percentage return = 23.3%
Annualized percentage return = 59.89%

Break even Information

Break even price point = 16.22
Break even buffer percentage = 43.32%

Detailed Calculations & Explanation

Stock Leg (Buy)
Total money spent = price per share * number of shares
Total money spent = 28.62 * 1500 = 42930.0

Option Leg (Sell)
Total money received = number of sold calls * 100 * call premium
Total money received = 15 * 100 * 12.4 = 18600.0

Transaction
Initial investment = Total money spent - Total money received
Initial investment = 42930.0 - 18600.0 = 24330.0

ROI calculations (If calls get exercised)
Money received upon exercise = (number of sold calls * 100 * strike price)
Money received upon exercise = 15 * 100 * 20.0 = 30000.0
Absolute returns = Money received upon exercise - Initial investment
Absolute returns = 30000.0 - 24330.0 = 5670.0
Percentage returns = 100 * (Absolute Returns/Initial investment)
Percentage returns = 100 * (5670.0/24330.0) = 23.3%
Annualized percentage returns = Percentage returns * 365/Max. days for which position may stay open
Annualized percentage returns = 23.3 * 365/142 = 59.89%

Break Even Information
Break-even point = Initial investment / Number of shares
Break-even point = 24330.0 / 1500 = 16.22
Break-even buffer percentage = 100 * (Current price - Break-even point) / Current price
Break-even buffer percentage = 100 * (28.62 - 16.22) / 28.62 = 43.32%
This means that this position can weather a 43.32% drop in stock's price before losing any money.

The position will be watched closely and liquidated if it starts to hover around the break even point. A fall in the stock price till the strike price is expected to be compensated linearly by corresponding fall in the option's premium (thereby maintaining a balance and avoiding drastic losses if liquidity is desired).

The current portfolio details can be accessed here.

Disclaimer: The content of this blog is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Options involve risk and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options.

Opened (AMZN) February 2009 covered call position for Amazon.com, Inc.

2009-01-29T21:17:00.000-08:00

A new covered calls position was established on January 29, 2009 with purchase of 600 shares of "Amazon.com, Inc." (AMZN). Here are the details.

Transaction Date = 20090129
Ticker = (AMZN)
Company Name = Amazon.com, Inc.

Stock Leg (Buy)

Number of shares purchased = 600
Price per share = 50.0
Total money spent = 30000.0

Option Leg (Sell)

Call Symbol = ZQNBI
Number of sold calls = 6
Strike price = 45.0
Strike date = 20090220
Call premium = 7.1
Total money received = 4260.0
Max. days for which position may stay open = 23

Return on investment (If calls are exercised)

Initial investment = 25740.0
Absolute return = 1260.0
Percentage return = 4.89%
Annualized percentage return = 77.6%

Break even Information

Break even price point = 42.9
Break even buffer percentage = 14.19%

Detailed Calculations & Explanation

Stock Leg (Buy)
Total money spent = price per share * number of shares
Total money spent = 50.0 * 600 = 30000.0

Option Leg (Sell)
Total money received = number of sold calls * 100 * call premium
Total money received = 6 * 100 * 7.1 = 4260.0

Transaction
Initial investment = Total money spent - Total money received
Initial investment = 30000.0 - 4260.0 = 25740.0

ROI calculations (If calls get exercised)
Money received upon exercise = (number of sold calls * 100 * strike price)
Money received upon exercise = 6 * 100 * 45.0 = 27000.0
Absolute returns = Money received upon exercise - Initial investment
Absolute returns = 27000.0 - 25740.0 = 1260.0
Percentage returns = 100 * (Absolute Returns/Initial investment)
Percentage returns = 100 * (1260.0/25740.0) = 4.89%
Annualized percentage returns = Percentage returns * 365/Max. days for which position may stay open
Annualized percentage returns = 4.89 * 365/23 = 77.6%

Break Even Information
Break-even point = Initial investment / Number of shares
Break-even point = 25740.0 / 600 = 42.9
Break-even buffer percentage = 100 * (Current price - Break-even point) / Current price
Break-even buffer percentage = 100 * (50.0 - 42.9) / 50.0 = 14.19%
This means that this position can weather a 14.19% drop in stock's price before losing any money.

The position will be watched closely and liquidated if it starts to hover around the break even point. A fall in the stock price till the strike price is expected to be compensated linearly by corresponding fall in the option's premium (thereby maintaining a balance and avoiding drastic losses if liquidity is desired).

The current portfolio details can be accessed here.

Disclaimer: The content of this blog is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Options involve risk and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options.

Opened (AFL) May 2009 covered call position for A F L A C INC

2009-01-26T23:09:00.001-08:00

A new covered calls position was established on January 26, 2009 with purchase of 2000 shares of "A F L A C INC" (AFL). Here are the details.

Transaction Date = 20090126
Ticker = (AFL)
Company Name = A F L A C INC

Stock Leg (Buy)

Number of shares purchased = 2000
Price per share = 19.62
Total money spent = 39240.0

Option Leg (Sell)

Call Symbol = AFLEV
Number of sold calls = 20
Strike price = 12.5
Strike date = 20090515
Call premium = 8.8
Total money received = 17600.0
Max. days for which position may stay open = 110

Return on investment (If calls are exercised)

Initial investment = 21640.0
Absolute return = 3360.0
Percentage return = 15.52%
Annualized percentage return = 51.49%

Break even Information

Break even price point = 10.82
Break even buffer percentage = 44.85%

Detailed Calculations & Explanation

Stock Leg (Buy)
Total money spent = price per share * number of shares
Total money spent = 19.62 * 2000 = 39240.0

Option Leg (Sell)
Total money received = number of sold calls * 100 * call premium
Total money received = 20 * 100 * 8.8 = 17600.0

Transaction
Initial investment = Total money spent - Total money received
Initial investment = 39240.0 - 17600.0 = 21640.0

ROI calculations (If calls get exercised)
Money received upon exercise = (number of sold calls * 100 * strike price)
Money received upon exercise = 20 * 100 * 12.5 = 25000.0
Absolute returns = Money received upon exercise - Initial investment
Absolute returns = 25000.0 - 21640.0 = 3360.0
Percentage returns = 100 * (Absolute Returns/Initial investment)
Percentage returns = 100 * (3360.0/21640.0) = 15.52%
Annualized percentage returns = Percentage returns * 365/Max. days for which position may stay open
Annualized percentage returns = 15.52 * 365/110 = 51.49%

Break Even Information
Break-even point = Initial investment / Number of shares
Break-even point = 21640.0 / 2000 = 10.82
Break-even buffer percentage = 100 * (Current price - Break-even point) / Current price
Break-even buffer percentage = 100 * (19.62 - 10.82) / 19.62 = 44.85%
This means that this position can weather a 44.85% drop in stock's price before losing any money.

The position will be watched closely and liquidated if it starts to hover around the break even point. A fall in the stock price till the strike price is expected to be compensated linearly by corresponding fall in the option's premium (thereby maintaining a balance and avoiding drastic losses if liquidity is desired).

The current portfolio details can be accessed here.

Disclaimer: The content of this blog is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Options involve risk and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options.

Opened (PRU) March 2009 covered call position for PRUDENTIAL FINCL

2009-01-26T22:35:00.001-08:00

A new covered calls position was established on January 26, 2009 with purchase of 1500 shares of "PRUDENTIAL FINCL " (PRU). Here are the details.

Transaction Date = 20090126
Ticker = (PRU)
Company Name = PRUDENTIAL FINCL

Stock Leg (Buy)

Number of shares purchased = 1500
Price per share = 25.02
Total money spent = 37530.0

Option Leg (Sell)

Call Symbol = PRUCW
Number of sold calls = 15
Strike price = 17.5
Strike date = 20090320
Call premium = 9.2
Total money received = 13800.0
Max. days for which position may stay open = 54

Return on investment (If calls are exercised)

Initial investment = 23730.0
Absolute return = 2520.0
Percentage return = 10.61%
Annualized percentage return = 71.71%

Break even Information

Break even price point = 15.82
Break even buffer percentage = 36.77%

Detailed Calculations & Explanation

Stock Leg (Buy)
Total money spent = price per share * number of shares
Total money spent = 25.02 * 1500 = 37530.0

Option Leg (Sell)
Total money received = number of sold calls * 100 * call premium
Total money received = 15 * 100 * 9.2 = 13800.0

Transaction
Initial investment = Total money spent - Total money received
Initial investment = 37530.0 - 13800.0 = 23730.0

ROI calculations (If calls get exercised)
Money received upon exercise = (number of sold calls * 100 * strike price)
Money received upon exercise = 15 * 100 * 17.5 = 26250.0
Absolute returns = Money received upon exercise - Initial investment
Absolute returns = 26250.0 - 23730.0 = 2520.0
Percentage returns = 100 * (Absolute Returns/Initial investment)
Percentage returns = 100 * (2520.0/23730.0) = 10.61%
Annualized percentage returns = Percentage returns * 365/Max. days for which position may stay open
Annualized percentage returns = 10.61 * 365/54 = 71.71%

Break Even Information
Break-even point = Initial investment / Number of shares
Break-even point = 23730.0 / 1500 = 15.82
Break-even buffer percentage = 100 * (Current price - Break-even point) / Current price
Break-even buffer percentage = 100 * (25.02 - 15.82) / 25.02 = 36.77%
This means that this position can weather a 36.77% drop in stock's price before losing any money.

The position will be watched closely and liquidated if it starts to hover around the break even point. A fall in the stock price till the strike price is expected to be compensated linearly by corresponding fall in the option's premium (thereby maintaining a balance and avoiding drastic losses if liquidity is desired).

The current portfolio details can be accessed here.

Disclaimer: The content of this blog is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Options involve risk and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options.

Opened (ROH) April 2009 covered call position for ROHM HAAS CO

2009-01-26T22:25:00.001-08:00

A new covered calls position was established on January 26, 2009 with purchase of 600 shares of "ROHM HAAS CO" (ROH). Here are the details.

Transaction Date = 20090126
Ticker = (ROH)
Company Name = ROHM HAAS CO

Stock Leg (Buy)

Number of shares purchased = 600
Price per share = 57.1
Total money spent = 34260.0

Option Leg (Sell)

Call Symbol = ROHDI
Number of sold calls = 6
Strike price = 45.0
Strike date = 20090417
Call premium = 16.4
Total money received = 9840.0
Max. days for which position may stay open = 82

Return on investment (If calls are exercised)

Initial investment = 24420.0
Absolute return = 2580.0
Percentage return = 10.56%
Annualized percentage return = 47.0%

Break even Information

Break even price point = 40.7
Break even buffer percentage = 28.72%

Detailed Calculations & Explanation

Stock Leg (Buy)
Total money spent = price per share * number of shares
Total money spent = 57.1 * 600 = 34260.0

Option Leg (Sell)
Total money received = number of sold calls * 100 * call premium
Total money received = 6 * 100 * 16.4 = 9840.0

Transaction
Initial investment = Total money spent - Total money received
Initial investment = 34260.0 - 9840.0 = 24420.0

ROI calculations (If calls get exercised)
Money received upon exercise = (number of sold calls * 100 * strike price)
Money received upon exercise = 6 * 100 * 45.0 = 27000.0
Absolute returns = Money received upon exercise - Initial investment
Absolute returns = 27000.0 - 24420.0 = 2580.0
Percentage returns = 100 * (Absolute Returns/Initial investment)
Percentage returns = 100 * (2580.0/24420.0) = 10.56%
Annualized percentage returns = Percentage returns * 365/Max. days for which position may stay open
Annualized percentage returns = 10.56 * 365/82 = 47.0%

Break Even Information
Break-even point = Initial investment / Number of shares
Break-even point = 24420.0 / 600 = 40.7
Break-even buffer percentage = 100 * (Current price - Break-even point) / Current price
Break-even buffer percentage = 100 * (57.1 - 40.7) / 57.1 = 28.72%
This means that this position can weather a 28.72% drop in stock's price before losing any money.

The position will be watched closely and liquidated if it starts to hover around the break even point. A fall in the stock price till the strike price is expected to be compensated linearly by corresponding fall in the option's premium (thereby maintaining a balance and avoiding drastic losses if liquidity is desired).

The current portfolio details can be accessed here.

Disclaimer: The content of this blog is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Options involve risk and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options.

Opened (AAPL) February 2009 covered call position for Apple Inc.

2009-01-21T21:21:00.001-08:00

A new covered calls position was established on January 21, 2009 with purchase of 300 shares of "Apple Inc." (AAPL). Here are the details.

Transaction Date = 20090121
Ticker = (AAPL)
Company Name = Apple Inc.

Stock Leg (Buy)

Number of shares purchased = 300
Price per share = 82.83
Total money spent = 24849.0

Option Leg (Sell)

Call Symbol = QAABP
Number of sold calls = 3
Strike price = 80.0
Strike date = 20090220
Call premium = 7.4
Total money received = 2220.0
Max. days for which position may stay open = 31

Return on investment (If calls are exercised)

Initial investment = 22629.0
Absolute return = 1371.0
Percentage return = 6.05%
Annualized percentage return = 71.23%

Break even Information

Break even price point = 75.43
Break even buffer percentage = 8.93%

Detailed Calculations & Explanation

Stock Leg (Buy)
Total money spent = price per share * number of shares
Total money spent = 82.83 * 300 = 24849.0

Option Leg (Sell)
Total money received = number of sold calls * 100 * call premium
Total money received = 3 * 100 * 7.4 = 2220.0

Transaction
Initial investment = Total money spent - Total money received
Initial investment = 24849.0 - 2220.0 = 22629.0

ROI calculations (If calls get exercised)
Money received upon exercise = (number of sold calls * 100 * strike price)
Money received upon exercise = 3 * 100 * 80.0 = 24000.0
Absolute returns = Money received upon exercise - Initial investment
Absolute returns = 24000.0 - 22629.0 = 1371.0
Percentage returns = 100 * (Absolute Returns/Initial investment)
Percentage returns = 100 * (1371.0/22629.0) = 6.05%
Annualized percentage returns = Percentage returns * 365/Max. days for which position may stay open
Annualized percentage returns = 6.05 * 365/31 = 71.23%

Break Even Information
Break-even point = Initial investment / Number of shares
Break-even point = 22629.0 / 300 = 75.43
Break-even buffer percentage = 100 * (Current price - Break-even point) / Current price
Break-even buffer percentage = 100 * (82.83 - 75.43) / 82.83 = 8.93%
This means that this position can weather a 8.93% drop in stock's price before losing any money.

The position will be watched closely and liquidated if it starts to hover around the break even point. A fall in the stock price till the strike price is expected to be compensated linearly by corresponding fall in the option's premium (thereby maintaining a balance and avoiding drastic losses if liquidity is desired).

The current portfolio details can be accessed here.

Disclaimer: The content of this blog is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Options involve risk and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options.

Opened (JPM) March 2009 covered call position for JP MORGAN CHASE C

2009-01-20T21:38:00.001-08:00

A new covered calls position was established on January 20, 2009 with purchase of 2000 shares of "JP MORGAN CHASE C" (JPM). Here are the details.

Transaction Date = 20090120
Ticker = (JPM)
Company Name = JP MORGAN CHASE C

Stock Leg (Buy)

Number of shares purchased = 2000
Price per share = 18.09
Total money spent = 36180.0

Option Leg (Sell)

Call Symbol = JSACY
Number of sold calls = 20
Strike price = 12.5
Strike date = 20090320
Call premium = 7.0
Total money received = 14000.0
Max. days for which position may stay open = 60

Return on investment (If calls are exercised)

Initial investment = 22180.0
Absolute return = 2820.0
Percentage return = 12.71%
Annualized percentage return = 77.31%

Break even Information

Break even price point = 11.09
Break even buffer percentage = 38.69%

Detailed Calculations & Explanation

Stock Leg (Buy)
Total money spent = price per share * number of shares
Total money spent = 18.09 * 2000 = 36180.0

Option Leg (Sell)
Total money received = number of sold calls * 100 * call premium
Total money received = 20 * 100 * 7.0 = 14000.0

Transaction
Initial investment = Total money spent - Total money received
Initial investment = 36180.0 - 14000.0 = 22180.0

ROI calculations (If calls get exercised)
Money received upon exercise = (number of sold calls * 100 * strike price)
Money received upon exercise = 20 * 100 * 12.5 = 25000.0
Absolute returns = Money received upon exercise - Initial investment
Absolute returns = 25000.0 - 22180.0 = 2820.0
Percentage returns = 100 * (Absolute Returns/Initial investment)
Percentage returns = 100 * (2820.0/22180.0) = 12.71%
Annualized percentage returns = Percentage returns * 365/Max. days for which position may stay open
Annualized percentage returns = 12.71 * 365/60 = 77.31%

Break Even Information
Break-even point = Initial investment / Number of shares
Break-even point = 22180.0 / 2000 = 11.09
Break-even buffer percentage = 100 * (Current price - Break-even point) / Current price
Break-even buffer percentage = 100 * (18.09 - 11.09) / 18.09 = 38.69%
This means that this position can weather a 38.69% drop in stock's price before losing any money.

The position will be watched closely and liquidated if it starts to hover around the break even point. A fall in the stock price till the strike price is expected to be compensated linearly by corresponding fall in the option's premium (thereby maintaining a balance and avoiding drastic losses if liquidity is desired).

The current portfolio details can be accessed here.

Disclaimer: The content of this blog is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Options involve risk and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options.

Opened (USB) March 2009 covered call position for US BANCORP

2009-01-20T21:36:00.001-08:00

A new covered calls position was established on January 20, 2009 with purchase of 2000 shares of "US BANCORP" (USB). Here are the details.

Transaction Date = 20090120
Ticker = (USB)
Company Name = US BANCORP

Stock Leg (Buy)

Number of shares purchased = 2000
Price per share = 15.34
Total money spent = 30680.0

Option Leg (Sell)

Call Symbol = USBCB
Number of sold calls = 20
Strike price = 10.0
Strike date = 20090320
Call premium = 6.3
Total money received = 12600.0
Max. days for which position may stay open = 60

Return on investment (If calls are exercised)

Initial investment = 18080.0
Absolute return = 1920.0
Percentage return = 10.61%
Annualized percentage return = 64.54%

Break even Information

Break even price point = 9.04
Break even buffer percentage = 41.06%

Detailed Calculations & Explanation

Stock Leg (Buy)
Total money spent = price per share * number of shares
Total money spent = 15.34 * 2000 = 30680.0

Option Leg (Sell)
Total money received = number of sold calls * 100 * call premium
Total money received = 20 * 100 * 6.3 = 12600.0

Transaction
Initial investment = Total money spent - Total money received
Initial investment = 30680.0 - 12600.0 = 18080.0

ROI calculations (If calls get exercised)
Money received upon exercise = (number of sold calls * 100 * strike price)
Money received upon exercise = 20 * 100 * 10.0 = 20000.0
Absolute returns = Money received upon exercise - Initial investment
Absolute returns = 20000.0 - 18080.0 = 1920.0
Percentage returns = 100 * (Absolute Returns/Initial investment)
Percentage returns = 100 * (1920.0/18080.0) = 10.61%
Annualized percentage returns = Percentage returns * 365/Max. days for which position may stay open
Annualized percentage returns = 10.61 * 365/60 = 64.54%

Break Even Information
Break-even point = Initial investment / Number of shares
Break-even point = 18080.0 / 2000 = 9.04
Break-even buffer percentage = 100 * (Current price - Break-even point) / Current price
Break-even buffer percentage = 100 * (15.34 - 9.04) / 15.34 = 41.06%
This means that this position can weather a 41.06% drop in stock's price before losing any money.

The position will be watched closely and liquidated if it starts to hover around the break even point. A fall in the stock price till the strike price is expected to be compensated linearly by corresponding fall in the option's premium (thereby maintaining a balance and avoiding drastic losses if liquidity is desired).

The current portfolio details can be accessed here.

Disclaimer: The content of this blog is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Options involve risk and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options.

Opened (PRU) March 2009 covered call position for PRUDENTIAL FINCL

2009-01-20T21:31:00.001-08:00

A new covered calls position was established on January 20, 2009 with purchase of 2000 shares of "PRUDENTIAL FINCL " (PRU). Here are the details.

Transaction Date = 20090120
Ticker = (PRU)
Company Name = PRUDENTIAL FINCL

Stock Leg (Buy)

Number of shares purchased = 2000
Price per share = 21.92
Total money spent = 43840.0

Option Leg (Sell)

Call Symbol = PRUCV
Number of sold calls = 20
Strike price = 12.5
Strike date = 20090320
Call premium = 10.5
Total money received = 21000.0
Max. days for which position may stay open = 60

Return on investment (If calls are exercised)

Initial investment = 22840.0
Absolute return = 2160.0
Percentage return = 9.45%
Annualized percentage return = 57.48%

Break even Information

Break even price point = 11.42
Break even buffer percentage = 47.9%

Detailed Calculations & Explanation

Stock Leg (Buy)
Total money spent = price per share * number of shares
Total money spent = 21.92 * 2000 = 43840.0

Option Leg (Sell)
Total money received = number of sold calls * 100 * call premium
Total money received = 20 * 100 * 10.5 = 21000.0

Transaction
Initial investment = Total money spent - Total money received
Initial investment = 43840.0 - 21000.0 = 22840.0

ROI calculations (If calls get exercised)
Money received upon exercise = (number of sold calls * 100 * strike price)
Money received upon exercise = 20 * 100 * 12.5 = 25000.0
Absolute returns = Money received upon exercise - Initial investment
Absolute returns = 25000.0 - 22840.0 = 2160.0
Percentage returns = 100 * (Absolute Returns/Initial investment)
Percentage returns = 100 * (2160.0/22840.0) = 9.45%
Annualized percentage returns = Percentage returns * 365/Max. days for which position may stay open
Annualized percentage returns = 9.45 * 365/60 = 57.48%

Break Even Information
Break-even point = Initial investment / Number of shares
Break-even point = 22840.0 / 2000 = 11.42
Break-even buffer percentage = 100 * (Current price - Break-even point) / Current price
Break-even buffer percentage = 100 * (21.92 - 11.42) / 21.92 = 47.9%
This means that this position can weather a 47.9% drop in stock's price before losing any money.

The position will be watched closely and liquidated if it starts to hover around the break even point. A fall in the stock price till the strike price is expected to be compensated linearly by corresponding fall in the option's premium (thereby maintaining a balance and avoiding drastic losses if liquidity is desired).

The current portfolio details can be accessed here.

Disclaimer: The content of this blog is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Options involve risk and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options.

Opened (MET) February 2009 covered call position for METLIFE INC

2009-01-20T21:23:00.001-08:00

A new covered calls position was established on January 20, 2009 with purchase of 1000 shares of "METLIFE INC" (MET). Here are the details.

Transaction Date = 20090120
Ticker = (MET)
Company Name = METLIFE INC

Stock Leg (Buy)

Number of shares purchased = 1000
Price per share = 23.82
Total money spent = 23820.0

Option Leg (Sell)

Call Symbol = METBD
Number of sold calls = 10
Strike price = 20.0
Strike date = 20090220
Call premium = 5.6
Total money received = 5600.0
Max. days for which position may stay open = 32

Return on investment (If calls are exercised)

Initial investment = 18220.0
Absolute return = 1780.0
Percentage return = 9.76%
Annualized percentage return = 111.32%

Break even Information

Break even price point = 18.22
Break even buffer percentage = 23.5%

Detailed Calculations & Explanation

Stock Leg (Buy)
Total money spent = price per share * number of shares
Total money spent = 23.82 * 1000 = 23820.0

Option Leg (Sell)
Total money received = number of sold calls * 100 * call premium
Total money received = 10 * 100 * 5.6 = 5600.0

Transaction
Initial investment = Total money spent - Total money received
Initial investment = 23820.0 - 5600.0 = 18220.0

ROI calculations (If calls get exercised)
Money received upon exercise = (number of sold calls * 100 * strike price)
Money received upon exercise = 10 * 100 * 20.0 = 20000.0
Absolute returns = Money received upon exercise - Initial investment
Absolute returns = 20000.0 - 18220.0 = 1780.0
Percentage returns = 100 * (Absolute Returns/Initial investment)
Percentage returns = 100 * (1780.0/18220.0) = 9.76%
Annualized percentage returns = Percentage returns * 365/Max. days for which position may stay open
Annualized percentage returns = 9.76 * 365/32 = 111.32%

Break Even Information
Break-even point = Initial investment / Number of shares
Break-even point = 18220.0 / 1000 = 18.22
Break-even buffer percentage = 100 * (Current price - Break-even point) / Current price
Break-even buffer percentage = 100 * (23.82 - 18.22) / 23.82 = 23.5%
This means that this position can weather a 23.5% drop in stock's price before losing any money.

The position will be watched closely and liquidated if it starts to hover around the break even point. A fall in the stock price till the strike price is expected to be compensated linearly by corresponding fall in the option's premium (thereby maintaining a balance and avoiding drastic losses if liquidity is desired).

The current portfolio details can be accessed here.

Disclaimer: The content of this blog is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Options involve risk and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options.

Returns for positions that closed in Jan 2009 - Summary

2009-01-19T13:00:00.000-08:00

10 positions closed in Jan 2009. Here is the summary.

Total money invested - 193638
Total money collected - 197480
Gains - 3842
Percentage gains - 1.98%

Almost all positions did as expected. The biggest problematic position was (wfc), which suffered from heavy losses. Had I paid better attention to it, perhaps those could have been cut down.

On an average, these investments were live for about 2-3 weeks.

Closed (BTU) January 2009 covered call position

2009-01-18T19:09:00.001-08:00

The (BTU) January 2009 covered calls position was closed on January 16, 2009. Here are the details.

Closing Transaction Date = 20090116
Opening Transaction Date = 20081226
Ticker = (BTU)
Opening Trade Details (Num shares, Price per share, Option strike price, Option premium, Initial investment) = (1000, 21.75, 20.0, 3.0, 18750.0)

The position was closed because options expired in the money and were called away.

Stock Leg (Sell)

Number of shares sold = 1000
Option strike price = 20.0
Total money received = 20000.0

Option Leg (Buy)

Call Symbol = BNUAD
Strike price = 20.0
Strike date = 20090116
Total money spent = 0.0

Return on investment

Initial investment = 18750.0
Absolute returns = 1250.0
Percentage returns = 6.66%

Detailed Calculations & Explanation

Stock Leg (Sell)
Money received = option strike price * number of shares
Money received = 20.0 * 1000 = 20000.0

Option Leg (Buy)
No need to close option position.
Money spent = 0

Transaction
Total money received = Money received - Money spent
Total money received = 20000.0 - 0.0 = 20000.0

ROI calculations
Absolute returns = Total money received - Initial investment
Absolute returns = 20000.0 - 18750.0 = 1250.0
Percentage returns = 100 * (Absolute Returns/Initial investment)
Percentage returns = 100 * (1250.0/18750.0) = 6.66%

The current portfolio details can be accessed here.

Disclaimer: The content of this blog is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Options involve risk and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options.

Closed (PRU) January 2009 covered call position

2009-01-18T19:06:00.001-08:00

The (PRU) January 2009 covered calls position was closed on January 16, 2009. Here are the details.

Closing Transaction Date = 20090116
Opening Transaction Date = 20081222
Ticker = (PRU)
Opening Trade Details (Num shares, Price per share, Option strike price, Option premium, Initial investment) = (1000, 26.35, 20.0, 7.4, 18950.0)

The position was closed because options expired in the money and were called away.

Stock Leg (Sell)

Number of shares sold = 1000
Option strike price = 20.0
Total money received = 20000.0

Option Leg (Buy)

Call Symbol = PRUAX
Strike price = 20.0
Strike date = 20090116
Total money spent = 0.0

Return on investment

Initial investment = 18950.0
Absolute returns = 1050.0
Percentage returns = 5.54%

Detailed Calculations & Explanation

Stock Leg (Sell)
Money received = option strike price * number of shares
Money received = 20.0 * 1000 = 20000.0

Option Leg (Buy)
No need to close option position.
Money spent = 0

Transaction
Total money received = Money received - Money spent
Total money received = 20000.0 - 0.0 = 20000.0

ROI calculations
Absolute returns = Total money received - Initial investment
Absolute returns = 20000.0 - 18950.0 = 1050.0
Percentage returns = 100 * (Absolute Returns/Initial investment)
Percentage returns = 100 * (1050.0/18950.0) = 5.54%

The current portfolio details can be accessed here.

Disclaimer: The content of this blog is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Options involve risk and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options.

Closed (GNW) January 2009 covered call position

2009-01-18T19:02:00.001-08:00

The (GNW) January 2009 covered calls position was closed on January 16, 2009. Here are the details.

Closing Transaction Date = 20090116
Opening Transaction Date = 20090105
Ticker = (GNW)
Opening Trade Details (Num shares, Price per share, Option strike price, Option premium, Initial investment) = (5000, 2.83, 2.5, 0.5, 11650.0)

The position was closed because options expired out of money.

Stock Leg (Sell)

Number of shares sold = 5000
Price per share = 2.38
Total money received = 11900.001

Option Leg (Buy)

Call Symbol = GNWAZ
Strike price = 2.5
Strike date = 20090116
Total money spent = 0.0

Return on investment

Initial investment = 11650.0
Absolute returns = 250.00098
Percentage returns = 2.14%

Detailed Calculations & Explanation

Stock Leg (Sell)
Money received = price per share * number of shares
Money received = 2.38 * 5000 = 11900.001

Option Leg (Buy)
No need to close option position.
Money spent = 0

Transaction
Total money received = Money received - Money spent
Total money received = 11900.001 - 0.0 = 11900.001

ROI calculations
Absolute returns = Total money received - Initial investment
Absolute returns = 11900.001 - 11650.0 = 250.00098
Percentage returns = 100 * (Absolute Returns/Initial investment)
Percentage returns = 100 * (250.00098/11650.0) = 2.14%

The current portfolio details can be accessed here.

Disclaimer: The content of this blog is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Options involve risk and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options.

Closed (ROH) January 2009 covered call position

2009-01-18T18:56:00.001-08:00

The (ROH) January 2009 covered calls position was closed on January 16, 2009. Here are the details.

Closing Transaction Date = 20090116
Opening Transaction Date = 20081224
Ticker = (ROH)
Opening Trade Details (Num shares, Price per share, Option strike price, Option premium, Initial investment) = (500, 63.88, 45.0, 22.6, 20640.0)

The position was closed because options expired in the money and were called away.

Stock Leg (Sell)

Number of shares sold = 500
Option strike price = 45.0
Total money received = 22500.0

Option Leg (Buy)

Call Symbol = ROHAI
Strike price = 45.0
Strike date = 20090116
Total money spent = 0.0

Return on investment

Initial investment = 20640.0
Absolute returns = 1860.0
Percentage returns = 9.01%

Detailed Calculations & Explanation

Stock Leg (Sell)
Money received = option strike price * number of shares
Money received = 45.0 * 500 = 22500.0

Option Leg (Buy)
No need to close option position.
Money spent = 0

Transaction
Total money received = Money received - Money spent
Total money received = 22500.0 - 0.0 = 22500.0

ROI calculations
Absolute returns = Total money received - Initial investment
Absolute returns = 22500.0 - 20640.0 = 1860.0
Percentage returns = 100 * (Absolute Returns/Initial investment)
Percentage returns = 100 * (1860.0/20640.0) = 9.01%

The current portfolio details can be accessed here.

Disclaimer: The content of this blog is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Options involve risk and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options.

Closed (AIZ) January 2009 covered call position

2009-01-18T18:49:00.001-08:00

The (AIZ) January 2009 covered calls position was closed on January 16, 2009. Here are the details.

Closing Transaction Date = 20090116
Opening Transaction Date = 20081223
Ticker = (AIZ)
Opening Trade Details (Num shares, Price per share, Option strike price, Option premium, Initial investment) = (1000, 26.2, 22.5, 4.8, 21400.0)

The position was closed because options expired in the money and were called away.

Stock Leg (Sell)

Number of shares sold = 1000
Option strike price = 22.5
Total money received = 22500.0

Option Leg (Buy)

Call Symbol = AIZAX
Strike price = 22.5
Strike date = 20090116
Total money spent = 0.0

Return on investment

Initial investment = 21400.0
Absolute return = 1100.0
Percentage return = 5.14%

Detailed Calculations & Explanation

Stock Leg (Sell)
Money received = option strike price * number of shares
Money received = 22.5 * 1000 = 22500.0

Option Leg (Buy)
No need to close option position.
Money spent = 0

Transaction
Total money received = Money received - Money spent
Total money received = 22500.0 - 0.0 = 22500.0

ROI calculations
Absolute returns = Total money received - Initial investment
Absolute returns = 22500.0 - 21400.0 = 1100.0
Percentage returns = 100 * (Absolute Returns/Initial investment)
Percentage returns = 100 * (1100.0/21400.0) = 5.14%

The current portfolio details can be accessed here.

Disclaimer: The content of this blog is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Options involve risk and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options.

Closed (AA) January 2009 covered call position

2009-01-18T18:45:00.001-08:00

The (AA) January 2009 covered calls position was closed on January 16, 2009. Here are the details.

Closing Transaction Date = 20090116
Opening Transaction Date = 20090107
Ticker = (AA)
Opening Trade Details (Num shares, Price per share, Option strike price, Option premium, Initial investment) = (2000, 10.89, 10.0, 1.25, 19280.0)

The position was closed because options expired out of money.

Stock Leg (Sell)

Number of shares sold = 2000
Price per share = 9.43
Total money received = 18860.0

Option Leg (Buy)

Call Symbol = AAAB
Strike price = 10.0
Strike date = 20090116
Total money spent = 0.0

Return on investment

Initial investment = 19280.0
Absolute return = -420.0
Percentage return = -2.17%

Detailed Calculations & Explanation

Stock Leg (Sell)
Money received = price per share * number of shares
Money received = 9.43 * 2000 = 18860.0

Option Leg (Buy)
No need to close option position.
Money spent = 0

Transaction
Total money received = Money received - Money spent
Total money received = 18860.0 - 0.0 = 18860.0

ROI calculations
Absolute returns = Total money received - Initial investment
Absolute returns = 18860.0 - 19280.0 = -420.0
Percentage returns = 100 * (Absolute Returns/Initial investment)
Percentage returns = 100 * (-420.0/19280.0) = -2.17%

The current portfolio details can be accessed here.

Disclaimer: The content of this blog is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Options involve risk and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options.

Closed (WFC) January 2009 covered call position

2009-01-18T18:33:00.000-08:00

The (WFC) January 2009 covered calls position was closed on January 16, 2009. Here are the details.

Closing Transaction Date = 20090116
Opening Transaction Date = 20090107
Ticker = (WFC)
Opening Trade Details (Num shares, Price per share, Option strike price, Option premium, Initial investment) = (1000, 25.87, 24.0, 2.8, 23070.0)

The position was closed because of safety check.

Stock Leg (Sell)

Number of shares sold = 1000
Price per share = 19.93
Total money received = 19930.0

Option Leg (Buy)

Call Symbol = WFCAH
Strike price = 24.0
Strike date = 20090116
Number of bought calls = 10
Call premium = 0.11
Total money spent = 110.0

Return on investment

Initial investment = 23070.0
Absolute return = -3250.0
Percentage return = -14.08%

Detailed Calculations & Explanation

Stock Leg (Sell)
Money received = price per share * number of shares
Money received = 19.93 * 1000 = 19930.0

Option Leg (Buy)
Money spent = number of bought calls * 100 * call premium
Money spent = 10 * 100 * 0.11 = 110.0

Transaction
Total money received = Money received - Money spent
Total money received = 19930.0 - 110.0 = 19820.0

ROI calculations
Absolute returns = Total money received - Initial investment
Absolute returns = 19820.0 - 23070.0 = -3250.0
Percentage returns = 100 * (Absolute Returns/Initial investment)
Percentage returns = 100 * (-3250.0/23070.0) = -14.08%

The current portfolio details can be accessed here.

Disclaimer: The content of this blog is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Options involve risk and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options.

Closed (YHOO) January 2009 covered call position

2009-01-18T18:20:00.001-08:00

The (YHOO) January 2009 covered calls position was closed on January 16, 2009. Here are the details.

Closing Transaction Date = 20090116
Opening Transaction Date = (20081224)
Ticker = (YHOO)
Opening Trade Details (Num shares, Price per share, Option strike price, Option premium, Initial investment) = (2000, 12.32, 11.0, 1.93, 20780.0)

The position was closed because options expired in the money and were called away.

Stock Leg (Sell)

Number of shares sold = 2000
Option strike price = 11.0
Total money received = 22000.0

Option Leg (Buy)

Call Symbol = YHQAK
Strike price = 11.0
Strike date = 20090116
Total money spent = 0.0

Return on investment

Initial investment = 20780.0
Absolute return = 1220.0
Percentage return = 5.87%

Detailed Calculations & Explanation

Stock Leg (Sell)
Money received = option strike price * number of shares
Money received = 11.0 * 2000 = 22000.0

Option Leg (Buy)
No need to close option position.
Money spent = 0

Transaction
Total money received = Money received - Money spent
Total money received = 22000.0 - 0.0 = 22000.0

ROI calculations
Absolute returns = Total money received - Initial investment
Absolute returns = 22000.0 - 20780.0 = 1220.0
Percentage returns = 100 * (Absolute Returns/Initial investment)
Percentage returns = 100 * (1220.0/20780.0) = 5.87%

The current portfolio details can be accessed here.

Disclaimer: The content of this blog is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Options involve risk and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options.

Closed (ZION) January 2009 covered call position

2009-01-18T18:08:00.001-08:00

The (ZION) January 2009 covered calls position was closed on January 16, 2009. Here are the details.

Closing Transaction Date = 20090116
Opening Transaction Date = (20081226)
Ticker = (ZION)
Opening Trade Details (Num shares, Price per share, Option strike price, Option premium, Initial investment) = (1000, 22.09, 20.0, 3.7, 18390.0)

The position was closed because safety check.

Stock Leg (Sell)

Number of shares sold = 1000
Price per share = 17.95
Total money received = 17950.0

Option Leg (Buy)

Call Symbol = ZNQAU
Strike price = 20.0
Strike date = 20090116
Number of bought calls = 10
Call premium = 0.05
Total money spent = 50.0

Return on investment

Initial investment = 18390.0
Absolute return = -490.0
Percentage return = -2.66%

Detailed Calculations & Explanation

Stock Leg (Sell)
Money received = price per share * number of shares
Money received = 17.95 * 1000 = 17950.0

Option Leg (Buy)
Money spent = number of bought calls * 100 * call premium
Money spent = 10 * 100 * 0.05 = 50.0

Transaction
Total money received = Money received - Money spent
Total money received = 17950.0 - 50.0 = 17900.0

ROI calculations
Absolute returns = Total money received - Initial investment
Absolute returns = 17900.0 - 18390.0 = -490.0
Percentage returns = 100 * (Absolute Returns/Initial investment)
Percentage returns = 100 * (-490.0/18390.0) = -2.66%
The current portfolio details can be accessed here.

Disclaimer: The content of this blog is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Options involve risk and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options.

Closed (ROH) January 2009 covered call position

2009-01-18T17:54:00.001-08:00

The (ROH) January 2009 covered calls position was closed on January 16, 2009. Here are the details.

Closing Transaction Date = 20090116
Opening Transaction Date = (20090105)
Ticker = (ROH)
Opening Trade Details (Num shares, Price per share, Option strike price, Option premium, Initial investment) = (400, 63.82, 55.0, 12.0, 20728.0)

The position was closed because options expired in the money and were called away.

Stock Leg (Sell)

Number of shares sold = 400
Option strike price = 55.0
Total money received = 22000.0

Option Leg (Buy)

Call Symbol = ROHAK
Strike price = 55.0
Strike date = 20090116
Total money spent = 0.0

Return on investment

Initial investment = 20728.0
Absolute return = 1272.0
Percentage return = 6.13%

Detailed Calculations & Explanation

Stock Leg (Sell)
Money received = option strike price * number of shares
Money received = 55.0 * 400 = 22000.0

Option Leg (Buy)
No need to close option position.
Money spent = 0

Transaction
Total money received = Money received - Money spent
Total money received = 22000.0 - 0.0 = 22000.0

ROI calculations
Absolute returns = Total money received - Initial investment
Absolute returns = 22000.0 - 20728.0 = 1272.0
Percentage returns = 100 * (Absolute Returns/Initial investment)
Percentage returns = 100 * (1272.0/20728.0) = 6.13%
The current portfolio details can be accessed here.

Disclaimer: The content of this blog is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Options involve risk and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options.

Opened (WFR) February 2009 covered call position for MEMC ELECTRONIC M

2009-01-13T21:37:00.001-08:00

A new covered calls position was established on January 13, 2009 with purchase of 2000 shares of "MEMC ELECTRONIC M" (WFR). Here are the details.

Transaction Date = 20090113
Ticker = (WFR)
Company Name = MEMC ELECTRONIC M

Stock Leg (Buy)

Number of shares purchased = 2000
Price per share = 14.78
Total money spent = 29560.0

Option Leg (Sell)

Call Symbol = CJCBV
Number of sold calls = 20
Strike price = 12.5
Strike date = 20090220
Call premium = 3.2
Total money received = 6400.0
Max. days for which position may stay open = 39

Return on investment (If calls are exercised)

Initial investment = 23160.0
Absolute return = 1840.0
Percentage return = 7.94%
Annualized percentage return = 74.31%

Break even Information

Break even price point = 11.58
Break even buffer percentage = 21.65%

Detailed Calculations & Explanation

Stock Leg (Buy)
Total money spent = price per share * number of shares
Total money spent = 14.78 * 2000 = 29560.0

Option Leg (Sell)
Total money received = number of sold calls * 100 * call premium
Total money received = 20 * 100 * 3.2 = 6400.0

Transaction
Initial investment = Total money spent - Total money received
Initial investment = 29560.0 - 6400.0 = 23160.0

ROI calculations (If calls get exercised)
Money received upon exercise = (number of sold calls * 100 * strike price)
Money received upon exercise = 20 * 100 * 12.5 = 25000.0
Absolute returns = Money received upon exercise - Initial investment
Absolute returns = 25000.0 - 23160.0 = 1840.0
Percentage returns = 100 * (Absolute Returns/Initial investment)
Percentage returns = 100 * (1840.0/23160.0) = 7.94%
Annualized percentage returns = Percentage returns * 365/Max. days for which position may stay open
Annualized percentage returns = 7.94 * 365/39 = 74.31%

Break Even Information
Break-even point = Initial investment / Number of shares
Break-even point = 23160.0 / 2000 = 11.58
Break-even buffer percentage = 100 * (Current price - Break-even point) / Current price
Break-even buffer percentage = 100 * (14.78 - 11.58) / 14.78 = 21.65%
This means that this position can weather a 21.65% drop in stock's price before losing any money.

The position will be watched closely and liquidated if it starts to hover around the break even point. A fall in the stock price till the strike price is expected to be compensated linearly by corresponding fall in the option's premium (thereby maintaining a balance and avoiding drastic losses if liquidity is desired).
The current portfolio details can be accessed here.

Disclaimer: The content of this blog is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Options involve risk and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options.

Opened (SWN) March 2009 covered call position for SOUTHWESTERN ENER

2009-01-13T21:32:00.001-08:00

A new covered calls position was established on January 13, 2009 with purchase of 1000 shares of "SOUTHWESTERN ENER" (SWN). Here are the details.

Transaction Date = 20090113
Ticker = (SWN)
Company Name = SOUTHWESTERN ENER

Stock Leg (Buy)

Number of shares purchased = 1000
Price per share = 29.5
Total money spent = 29500.0

Option Leg (Sell)

Call Symbol = SWNCE
Number of sold calls = 10
Strike price = 25.0
Strike date = 20090320
Call premium = 6.8
Total money received = 6800.0
Max. days for which position may stay open = 67

Return on investment (If calls are exercised)

Initial investment = 22700.0
Absolute return = 2300.0
Percentage return = 10.13%
Annualized percentage return = 55.18%

Break even Information

Break even price point = 22.7
Break even buffer percentage = 23.05%

Detailed Calculations & Explanation

Stock Leg (Buy)
Total money spent = price per share * number of shares
Total money spent = 29.5 * 1000 = 29500.0

Option Leg (Sell)
Total money received = number of sold calls * 100 * call premium
Total money received = 10 * 100 * 6.8 = 6800.0

Transaction
Initial investment = Total money spent - Total money received
Initial investment = 29500.0 - 6800.0 = 22700.0

ROI calculations (If calls get exercised)
Money received upon exercise = (number of sold calls * 100 * strike price)
Money received upon exercise = 10 * 100 * 25.0 = 25000.0
Absolute returns = Money received upon exercise - Initial investment
Absolute returns = 25000.0 - 22700.0 = 2300.0
Percentage returns = 100 * (Absolute Returns/Initial investment)
Percentage returns = 100 * (2300.0/22700.0) = 10.13%
Annualized percentage returns = Percentage returns * 365/Max. days for which position may stay open
Annualized percentage returns = 10.13 * 365/67 = 55.18%

Break Even Information
Break-even point = Initial investment / Number of shares
Break-even point = 22700.0 / 1000 = 22.7
Break-even buffer percentage = 100 * (Current price - Break-even point) / Current price
Break-even buffer percentage = 100 * (29.5 - 22.7) / 29.5 = 23.05%
This means that this position can weather a 23.05% drop in stock's price before losing any money.

The position will be watched closely and liquidated if it starts to hover around the break even point. A fall in the stock price till the strike price is expected to be compensated linearly by corresponding fall in the option's premium (thereby maintaining a balance and avoiding drastic losses if liquidity is desired).
The current portfolio details can be accessed here.

Disclaimer: The content of this blog is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Options involve risk and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options.

Excellent article about covered calls and alternatives

2009-01-11T09:18:00.000-08:00

Jeff has written an excellent post on this. Thanks for sharing Jeff.

I sincerely urge all of you to go through it. He talks about alternatives to covered calls based investment strategy and analyzes each of those with some rigor.

A great read overall. Here is a link to the original post:

Stay with covered calls

10 positions will close on January 16 2009

2009-01-10T22:20:00.000-08:00

Option expiration day for Jan 2009 (Jan 16) is approaching fast. (It is usually the third Friday for a given month). Currently, I have 10 open positions that will close on that day. I just did a quick health check on these positions and I am happy to report that all of them are doing very well so far.

So, unless there are some nasty moves, we are looking at fairly good gains. I will post details once these positions are closed.

Establishing a position -- How to?

2009-01-10T21:34:00.000-08:00

I had promised that I will write a post about it. So here it goes.

My criteria for choosing a position is fairly straightforward. It consists of following:

There should be a good amount of buffer available to weather a potential downside.
There should be decent returns for the initial investment

In reality, these often contradict with each other and thus one needs to find the right balance.

Doing this requires some analysis and is quite painful if done manually. So, to do this efficiently, I have put together a system. My requirements were

The system should be completely automated (or automated at least for majority of the work)
The system should be very simple (and based on simple calculations)

In exchange, I am willing to monitor the positions fairly regularly (and act on them if deemed necessary).

So, here is my work-flow for choosing a position:

I have developed some scripts that fetch the data for both stock quotes as well as options quotes on a regular basis for a list of securities (Right now, my list is about 1000 tickers. I plan of expanding this soon.)
Once step #1 finishes, another set of scripts start looking at each stock (and corresponding options). Then for each stock/option combination (Note that there are multiple such combinations for a single stock), this step first computes max number of days a position may stay open for. After that, it computes two ratios: The break-even buffer percentage (expressed as current stock price) per day and max percentage gains this position may yield (if called of course) per day. A score (which is a monotonic and continuous function) is assigned based on these values for both ratios. Then a single score is assigned to each such position using a fairly simple formula, which combines these two scores into a single one based on relative importance with respect to each other. There is no exact science behind doing so. I have expressed these formulas using my beliefs/knowledge and I constantly tune them based on observed data points. So at the end of this, a score is assigned to all positions. Note that the score is normalized at this point (i.e. it is between 0 to 1) so that any two positions can be meaningfully compared. For me, higher scores indicate better positions.
Next, based on certain pre-determined thresholds, these scripts generate a list of about 10-20 positions on a daily basis that are deemed "best" according to their scores.
At this point, the process becomes manual. I personally look at each such position and decided whether to accept/reject it. I mostly look at very simple stuff like fundamentals of the company, market cap, cash position, eps etc. etc.

About 90% of this work is automated. These are really simple scripts that I coded up over an evening.

So that is it. If you are interested in any of the specifics, email me. We can start a conversation.

Hope all of this makes sense.

Opened (SNDK) February 2009 covered call position for SanDisk Corporati

2009-01-09T20:46:00.001-08:00

A new covered calls position was established on January 9, 2009 with purchase of 2000 shares of "SanDisk Corporati" (SNDK). Here are the details.

Transaction Date = 20090109
Ticker = (SNDK)
Company Name = SanDisk Corporati

Stock Leg (Buy)

Number of shares purchased = 2000
Price per share = 12.3
Total money spent = 24600.0

Option Leg (Sell)

Call Symbol = SWQBM
Number of sold calls = 20
Strike price = 11.0
Strike date = 20090220
Call premium = 2.42
Total money received = 4840.0
Max. days for which position may stay open = 43

Return on investment (If calls are exercised)

Initial investment = 19760.0
Absolute return = 2240.0
Percentage return = 11.33%
Annualized percentage return = 96.17%

Break even Information

Break even price point = 9.88
Break even buffer percentage = 19.67%

Detailed Calculations & Explanation

Stock Leg (Buy)
Total money spent = price per share * number of shares
Total money spent = 12.3 * 2000 = 24600.0

Option Leg (Sell)
Total money received = number of sold calls * 100 * call premium
Total money received = 20 * 100 * 2.42 = 4840.0

Transaction
Initial investment = Total money spent - Total money received
Initial investment = 24600.0 - 4840.0 = 19760.0

ROI calculations (If calls get exercised)
Money received upon exercise = (number of sold calls * 100 * strike price)
Money received upon exercise = 20 * 100 * 11.0 = 22000.0
Absolute returns = Money received upon exercise - Initial investment
Absolute returns = 22000.0 - 19760.0 = 2240.0
Percentage returns = 100 * (Absolute Returns/Initial investment)
Percentage returns = 100 * (2240.0/19760.0) = 11.33%
Annualized percentage returns = Percentage returns * 365/Max. days for which position may stay open
Annualized percentage returns = 11.33 * 365/43 = 96.17%

Break Even Information
Break-even point = Initial investment / Number of shares
Break-even point = 19760.0 / 2000 = 9.88
Break-even buffer percentage = 100 * (Current price - Break-even point) / Current price
Break-even buffer percentage = 100 * (12.3 - 9.88) / 12.3 = 19.67%
This means that this position can weather a 19.67% drop in stock's price before losing any money.

The position will be watched closely and liquidated if it starts to hover around the break even point. A fall in the stock price till the strike price is expected to be compensated linearly by corresponding fall in the option's premium (thereby maintaining a balance and avoiding drastic losses if liquidity is desired).
The current portfolio details can be accessed here.

Disclaimer: The content of this blog is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Options involve risk and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options.

Opened (JWN) February 2009 covered call position for NORDSTROM INC

2009-01-09T20:38:00.001-08:00

A new covered calls position was established on January 9, 2009 with purchase of 2000 shares of "NORDSTROM INC" (JWN). Here are the details.

Transaction Date = 20090109
Ticker = (JWN)
Company Name = NORDSTROM INC

Stock Leg (Buy)

Number of shares purchased = 2000
Price per share = 13.96
Total money spent = 27920.0

Option Leg (Sell)

Call Symbol = JWNBV
Number of sold calls = 20
Strike price = 12.5
Strike date = 20090220
Call premium = 2.45
Total money received = 4900.0
Max. days for which position may stay open = 43

Return on investment (If calls are exercised)

Initial investment = 23020.0
Absolute return = 1980.0
Percentage return = 8.6%
Annualized percentage return = 73.0%

Break even Information

Break even price point = 11.51
Break even buffer percentage = 17.55%

Detailed Calculations & Explanation

Stock Leg (Buy)
Total money spent = price per share * number of shares
Total money spent = 13.96 * 2000 = 27920.0

Option Leg (Sell)
Total money received = number of sold calls * 100 * call premium
Total money received = 20 * 100 * 2.45 = 4900.0

Transaction
Initial investment = Total money spent - Total money received
Initial investment = 27920.0 - 4900.0 = 23020.0

ROI calculations (If calls get exercised)
Money received upon exercise = (number of sold calls * 100 * strike price)
Money received upon exercise = 20 * 100 * 12.5 = 25000.0
Absolute returns = Money received upon exercise - Initial investment
Absolute returns = 25000.0 - 23020.0 = 1980.0
Percentage returns = 100 * (Absolute Returns/Initial investment)
Percentage returns = 100 * (1980.0/23020.0) = 8.6%
Annualized percentage returns = Percentage returns * 365/Max. days for which position may stay open
Annualized percentage returns = 8.6 * 365/43 = 73.0%

Break Even Information
Break-even point = Initial investment / Number of shares
Break-even point = 23020.0 / 2000 = 11.51
Break-even buffer percentage = 100 * (Current price - Break-even point) / Current price
Break-even buffer percentage = 100 * (13.96 - 11.51) / 13.96 = 17.55%
This means that this position can weather a 17.55% drop in stock's price before losing any money.

The position will be watched closely and liquidated if it starts to hover around the break even point. A fall in the stock price till the strike price is expected to be compensated linearly by corresponding fall in the option's premium (thereby maintaining a balance and avoiding drastic losses if liquidity is desired).
The current portfolio details can be accessed here.

Disclaimer: The content of this blog is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Options involve risk and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options.

Opened (BTU) March 2009 covered call position for PEABODY ENERGY CO

2009-01-08T21:43:00.001-08:00

A new covered calls position was established on January 8, 2009 with purchase of 1000 shares of "PEABODY ENERGY CO" (BTU). Here are the details.

Transaction Date = 20090108
Ticker = (BTU)
Company Name = PEABODY ENERGY CO

Stock Leg (Buy)

Number of shares purchased = 1000
Price per share = 26.68
Total money spent = 26680.0

Option Leg (Sell)

Call Symbol = BTUCX
Number of sold calls = 10
Strike price = 22.5
Strike date = 20090320
Call premium = 6.5
Total money received = 6500.0
Max. days for which position may stay open = 72

Return on investment (If calls are exercised)

Initial investment = 20180.0
Absolute return = 2320.0
Percentage return = 11.49%
Annualized percentage return = 58.24%

Break even Information

Break even price point = 20.18
Break even buffer percentage = 24.36%

Detailed Calculations & Explanation

Stock Leg (Buy)
Total money spent = price per share * number of shares
Total money spent = 26.68 * 1000 = 26680.0

Option Leg (Sell)
Total money received = number of sold calls * 100 * call premium
Total money received = 10 * 100 * 6.5 = 6500.0

Transaction
Initial investment = Total money spent - Total money received
Initial investment = 26680.0 - 6500.0 = 20180.0

ROI calculations (If calls get exercised)
Money received upon exercise = (number of sold calls * 100 * strike price)
Money received upon exercise = 10 * 100 * 22.5 = 22500.0
Absolute returns = Money received upon exercise - Initial investment
Absolute returns = 22500.0 - 20180.0 = 2320.0
Percentage returns = 100 * (Absolute Returns/Initial investment)
Percentage returns = 100 * (2320.0/20180.0) = 11.49%
Annualized percentage returns = Percentage returns * 365/Max. days for which position may stay open
Annualized percentage returns = 11.49 * 365/72 = 58.24%

Break Even Information
Break-even point = Initial investment / Number of shares
Break-even point = 20180.0 / 1000 = 20.18
Break-even buffer percentage = 100 * (Current price - Break-even point) / Current price
Break-even buffer percentage = 100 * (26.68 - 20.18) / 26.68 = 24.36%
This means that this position can weather a 24.36% drop in stock's price before losing any money.

The position will be watched closely and liquidated if it starts to hover around the break even point. A fall in the stock price till the strike price is expected to be compensated linearly by corresponding fall in the option's premium (thereby maintaining a balance and avoiding drastic losses if liquidity is desired).
The current portfolio details can be accessed here.

Disclaimer: The content of this blog is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Options involve risk and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options.

Opened (JPM) March 2009 covered call position for JP MORGAN CHASE C

2009-01-08T21:38:00.001-08:00

A new covered calls position was established on January 8, 2009 with purchase of 1000 shares of "JP MORGAN CHASE C" (JPM). Here are the details.

Transaction Date = 20090108
Ticker = (JPM)
Company Name = JP MORGAN CHASE C

Stock Leg (Buy)

Number of shares purchased = 1000
Price per share = 27.22
Total money spent = 27220.0

Option Leg (Sell)

Call Symbol = JSACS
Number of sold calls = 10
Strike price = 22.5
Strike date = 20090320
Call premium = 6.8
Total money received = 6800.0
Max. days for which position may stay open = 72

Return on investment (If calls are exercised)

Initial investment = 20420.0
Absolute return = 2080.0
Percentage return = 10.18%
Annualized percentage return = 51.6%

Break even Information

Break even price point = 20.42
Break even buffer percentage = 24.98%

Detailed Calculations & Explanation

Stock Leg (Buy)
Total money spent = price per share * number of shares
Total money spent = 27.22 * 1000 = 27220.0

Option Leg (Sell)
Total money received = number of sold calls * 100 * call premium
Total money received = 10 * 100 * 6.8 = 6800.0

Transaction
Initial investment = Total money spent - Total money received
Initial investment = 27220.0 - 6800.0 = 20420.0

ROI calculations (If calls get exercised)
Money received upon exercise = (number of sold calls * 100 * strike price)
Money received upon exercise = 10 * 100 * 22.5 = 22500.0
Absolute returns = Money received upon exercise - Initial investment
Absolute returns = 22500.0 - 20420.0 = 2080.0
Percentage returns = 100 * (Absolute Returns/Initial investment)
Percentage returns = 100 * (2080.0/20420.0) = 10.18%
Annualized percentage returns = Percentage returns * 365/Max. days for which position may stay open
Annualized percentage returns = 10.18 * 365/72 = 51.6%

Break Even Information
Break-even point = Initial investment / Number of shares
Break-even point = 20420.0 / 1000 = 20.42
Break-even buffer percentage = 100 * (Current price - Break-even point) / Current price
Break-even buffer percentage = 100 * (27.22 - 20.42) / 27.22 = 24.98%
This means that this position can weather a 24.98% drop in stock's price before losing any money.

The position will be watched closely and liquidated if it starts to hover around the break even point. A fall in the stock price till the strike price is expected to be compensated linearly by corresponding fall in the option's premium (thereby maintaining a balance and avoiding drastic losses if liquidity is desired).
The current portfolio details can be accessed here.

Disclaimer: The content of this blog is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Options involve risk and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options.

Opened (FCX) February 2009 covered call position for FREEPORT MCMORAN

2009-01-08T21:31:00.001-08:00

A new covered calls position was established on January 8, 2009 with purchase of 1000 shares of "FREEPORT MCMORAN " (FCX). Here are the details.

Transaction Date = 20090108
Ticker = (FCX)
Company Name = FREEPORT MCMORAN

Stock Leg (Buy)

Number of shares purchased = 1000
Price per share = 29.25
Total money spent = 29250.0

Option Leg (Sell)

Call Symbol = FCXBE
Number of sold calls = 10
Strike price = 25.0
Strike date = 20090220
Call premium = 6.0
Total money received = 6000.0
Max. days for which position may stay open = 44

Return on investment (If calls are exercised)

Initial investment = 23250.0
Absolute return = 1750.0
Percentage return = 7.52%
Annualized percentage return = 62.38%

Break even Information

Break even price point = 23.25
Break even buffer percentage = 20.51%

Detailed Calculations & Explanation

Stock Leg (Buy)
Total money spent = price per share * number of shares
Total money spent = 29.25 * 1000 = 29250.0

Option Leg (Sell)
Total money received = number of sold calls * 100 * call premium
Total money received = 10 * 100 * 6.0 = 6000.0

Transaction
Initial investment = Total money spent - Total money received
Initial investment = 29250.0 - 6000.0 = 23250.0

ROI calculations (If calls get exercised)
Money received upon exercise = (number of sold calls * 100 * strike price)
Money received upon exercise = 10 * 100 * 25.0 = 25000.0
Absolute returns = Money received upon exercise - Initial investment
Absolute returns = 25000.0 - 23250.0 = 1750.0
Percentage returns = 100 * (Absolute Returns/Initial investment)
Percentage returns = 100 * (1750.0/23250.0) = 7.52%
Annualized percentage returns = Percentage returns * 365/Max. days for which position may stay open
Annualized percentage returns = 7.52 * 365/44 = 62.38%

Break Even Information
Break-even point = Initial investment / Number of shares
Break-even point = 23250.0 / 1000 = 23.25
Break-even buffer percentage = 100 * (Current price - Break-even point) / Current price
Break-even buffer percentage = 100 * (29.25 - 23.25) / 29.25 = 20.51%
This means that this position can weather a 20.51% drop in stock's price before losing any money.

The position will be watched closely and liquidated if it starts to hover around the break even point. A fall in the stock price till the strike price is expected to be compensated linearly by corresponding fall in the option's premium (thereby maintaining a balance and avoiding drastic losses if liquidity is desired).
The current portfolio details can be accessed here.

Disclaimer: The content of this blog is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Options involve risk and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options.

Opened (FMCN) February 2009 covered call position for Focus Media Holdi

2009-01-08T21:27:00.001-08:00

A new covered calls position was established on January 8, 2009 with purchase of 2000 shares of "Focus Media Holdi" (FMCN). Here are the details.

Transaction Date = 20090108
Ticker = (FMCN)
Company Name = Focus Media Holdi

Stock Leg (Buy)

Number of shares purchased = 2000
Price per share = 8.99
Total money spent = 17980.0

Option Leg (Sell)

Call Symbol = FUOBU
Number of sold calls = 20
Strike price = 7.5
Strike date = 20090220
Call premium = 2.05
Total money received = 4100.0
Max. days for which position may stay open = 44

Return on investment (If calls are exercised)

Initial investment = 13880.0
Absolute return = 1120.0
Percentage return = 8.06%
Annualized percentage return = 66.86%

Break even Information

Break even price point = 6.94
Break even buffer percentage = 22.8%

Detailed Calculations & Explanation

Stock Leg (Buy)
Total money spent = price per share * number of shares
Total money spent = 8.99 * 2000 = 17980.0

Option Leg (Sell)
Total money received = number of sold calls * 100 * call premium
Total money received = 20 * 100 * 2.05 = 4100.0

Transaction
Initial investment = Total money spent - Total money received
Initial investment = 17980.0 - 4100.0 = 13880.0

ROI calculations (If calls get exercised)
Money received upon exercise = (number of sold calls * 100 * strike price)
Money received upon exercise = 20 * 100 * 7.5 = 15000.0
Absolute returns = Money received upon exercise - Initial investment
Absolute returns = 15000.0 - 13880.0 = 1120.0
Percentage returns = 100 * (Absolute Returns/Initial investment)
Percentage returns = 100 * (1120.0/13880.0) = 8.06%
Annualized percentage returns = Percentage returns * 365/Max. days for which position may stay open
Annualized percentage returns = 8.06 * 365/44 = 66.86%

Break Even Information
Break-even point = Initial investment / Number of shares
Break-even point = 13880.0 / 2000 = 6.94
Break-even buffer percentage = 100 * (Current price - Break-even point) / Current price
Break-even buffer percentage = 100 * (8.99 - 6.94) / 8.99 = 22.8%
This means that this position can weather a 22.8% drop in stock's price before losing any money.

The position will be watched closely and liquidated if it starts to hover around the break even point. A fall in the stock price till the strike price is expected to be compensated linearly by corresponding fall in the option's premium (thereby maintaining a balance and avoiding drastic losses if liquidity is desired).
The current portfolio details can be accessed here.

Disclaimer: The content of this blog is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Options involve risk and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options.

Opened (ICE) February 2009 covered call position for INTERCNTNTLEXCHAN

2009-01-07T21:53:00.001-08:00

A new covered calls position was established on January 7, 2009 with purchase of 400 shares of "INTERCNTNTL EXCHAN" (ICE). Here are the details.

Transaction Date = 20090107
Ticker = (ICE)
Company Name = INTERCNTNTLEXCHAN

Stock Leg (Buy)

Number of shares purchased = 400
Price per share = 64.08
Total money spent = 25632.0

Option Leg (Sell)

Call Symbol = ICEBK
Number of sold calls = 4
Strike price = 55.0
Strike date = 20090220
Call premium = 13.4
Total money received = 5360.0
Max. days for which position may stay open = 45

Return on investment (If calls are exercised)

Initial investment = 20272.0
Absolute return = 1728.0
Percentage return = 8.52%
Annualized percentage return = 69.1%

Break even Information

Break even price point = 50.68
Break even buffer percentage = 20.91%

Detailed Calculations & Explanation

Stock Leg (Buy)
Total money spent = price per share * number of shares
Total money spent = 64.08 * 400 = 25632.0

Option Leg (Sell)
Total money received = number of sold calls * 100 * call premium
Total money received = 4 * 100 * 13.4 = 5360.0

Transaction
Initial investment = Total money spent - Total money received
Initial investment = 25632.0 - 5360.0 = 20272.0

ROI calculations (If calls get exercised)
Money received upon exercise = (number of sold calls * 100 * strike price)
Money received upon exercise = 4 * 100 * 55.0 = 22000.0
Absolute returns = Money received upon exercise - Initial investment
Absolute returns = 22000.0 - 20272.0 = 1728.0
Percentage returns = 100 * (Absolute Returns/Initial investment)
Percentage returns = 100 * (1728.0/20272.0) = 8.52%
Annualized percentage returns = Percentage returns * 365/Max. days for which position may stay open
Annualized percentage returns = 8.52 * 365/45 = 69.1%

Break Even Information
Break-even point = Initial investment / Number of shares
Break-even point = 20272.0 / 400 = 50.68
Break-even buffer percentage = 100 * (Current price - Break-even point) / Current price
Break-even buffer percentage = 100 * (64.08 - 50.68) / 64.08 = 20.91%
This means that this position can weather a 20.91% drop in stock's price before losing any money.

The position will be watched closely and liquidated if it starts to hover around the break even point. A fall in the stock price till the strike price is expected to be compensated linearly by corresponding fall in the option's premium (thereby maintaining a balance and avoiding drastic losses if liquidity is desired).
The current portfolio details can be accessed here.

Disclaimer: The content of this blog is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Options involve risk and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options.

Opened (WFC) January 2009 covered call position for WELLS FARGO & CO

2009-01-07T21:35:00.001-08:00

A new covered calls position was established on January 7, 2009 with purchase of 1000 shares of "WELLS FARGO & CO " (WFC). Here are the details.

Transaction Date = 20090107
Ticker = (WFC)
Company Name = WELLS FARGO & CO

Stock Leg (Buy)

Number of shares purchased = 1000
Price per share = 25.87
Total money spent = 25870.0

Option Leg (Sell)

Call Symbol = WFCAH
Number of sold calls = 10
Strike price = 24.0
Strike date = 20090116
Call premium = 2.8
Total money received = 2800.0
Max. days for which position may stay open = 10

Return on investment (If calls are exercised)

Initial investment = 23070.0
Absolute return = 930.0
Percentage return = 4.03%
Annualized percentage return = 147.09%

Break even Information

Break even price point = 23.07
Break even buffer percentage = 10.82%

Detailed Calculations & Explanation

Stock Leg (Buy)
Total money spent = price per share * number of shares
Total money spent = 25.87 * 1000 = 25870.0

Option Leg (Sell)
Total money received = number of sold calls * 100 * call premium
Total money received = 10 * 100 * 2.8 = 2800.0

Transaction
Initial investment = Total money spent - Total money received
Initial investment = 25870.0 - 2800.0 = 23070.0

ROI calculations (If calls get exercised)
Money received upon exercise = (number of sold calls * 100 * strike price)
Money received upon exercise = 10 * 100 * 24.0 = 24000.0
Absolute returns = Money received upon exercise - Initial investment
Absolute returns = 24000.0 - 23070.0 = 930.0
Percentage returns = 100 * (Absolute Returns/Initial investment)
Percentage returns = 100 * (930.0/23070.0) = 4.03%
Annualized percentage returns = Percentage returns * 365/Max. days for which position may stay open
Annualized percentage returns = 4.03 * 365/10 = 147.09%

Break Even Information
Break-even point = Initial investment / Number of shares
Break-even point = 23070.0 / 1000 = 23.07
Break-even buffer percentage = 100 * (Current price - Break-even point) / Current price
Break-even buffer percentage = 100 * (25.87 - 23.07) / 25.87 = 10.82%
This means that this position can weather a 10.82% drop in stock's price before losing any money.

The position will be watched closely and liquidated if it starts to hover around the break even point. A fall in the stock price till the strike price is expected to be compensated linearly by corresponding fall in the option's premium (thereby maintaining a balance and avoiding drastic losses if liquidity is desired).
The current portfolio details can be accessed here.

Disclaimer: The content of this blog is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Options involve risk and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options.

Opened (AA) January 2009 covered call position for ALCOA INC

2009-01-07T21:26:00.001-08:00

A new covered calls position was established on January 7, 2009 with purchase of 2000 shares of "ALCOA INC" (AA). Here are the details.

Transaction Date = 20090107
Ticker = (AA)
Company Name = ALCOA INC

Stock Leg (Buy)

Number of shares purchased = 2000
Price per share = 10.89
Total money spent = 21780.0

Option Leg (Sell)

Call Symbol = AAAB
Number of sold calls = 20
Strike price = 10.0
Strike date = 20090116
Call premium = 1.25
Total money received = 2500.0
Max. days for which position may stay open = 10

Return on investment (If calls are exercised)

Initial investment = 19280.0
Absolute return = 720.0
Percentage return = 3.73%
Annualized percentage return = 136.14%

Break even Information

Break even price point = 9.64
Break even buffer percentage = 11.47%

Detailed Calculations & Explanation

Stock Leg (Buy)
Total money spent = price per share * number of shares
Total money spent = 10.89 * 2000 = 21780.0

Option Leg (Sell)
Total money received = number of sold calls * 100 * call premium
Total money received = 20 * 100 * 1.25 = 2500.0

Transaction
Initial investment = Total money spent - Total money received
Initial investment = 21780.0 - 2500.0 = 19280.0

ROI calculations (If calls get exercised)
Money received upon exercise = (number of sold calls * 100 * strike price)
Money received upon exercise = 20 * 100 * 10.0 = 20000.0
Absolute returns = Money received upon exercise - Initial investment
Absolute returns = 20000.0 - 19280.0 = 720.0
Percentage returns = 100 * (Absolute Returns/Initial investment)
Percentage returns = 100 * (720.0/19280.0) = 3.73%
Annualized percentage returns = Percentage returns * 365/Max. days for which position may stay open
Annualized percentage returns = 3.73 * 365/10 = 136.14%

Break Even Information
Break-even point = Initial investment / Number of shares
Break-even point = 19280.0 / 2000 = 9.64
Break-even buffer percentage = 100 * (Current price - Break-even point) / Current price
Break-even buffer percentage = 100 * (10.89 - 9.64) / 10.89 = 11.47%
This means that this position can weather a 11.47% drop in stock's price before losing any money.

The position will be watched closely and liquidated if it starts to hover around the break even point. A fall in the stock price till the strike price is expected to be compensated linearly by corresponding fall in the option's premium (thereby maintaining a balance and avoiding drastic losses if liquidity is desired).
The current portfolio details can be accessed here.

Disclaimer: The content of this blog is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Options involve risk and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options.

Opened (CNX) February 2009 covered call position for CONS ENERGY INC

2009-01-05T22:28:00.001-08:00

A new covered calls position was established on January 5, 2009 with purchase of 800 shares of "CONS ENERGY INC" (CNX). Here are the details.

Transaction Date = 20090105
Ticker = (CNX)
Company Name = CONS ENERGY INC

Stock Leg (Buy)

Number of shares purchased = 800
Price per share = 34.87
Total money spent = 27896.0

Option Leg (Sell)

Call Symbol = CNXBF
Number of sold calls = 8
Strike price = 30.0
Strike date = 20090220
Call premium = 7.2
Total money received = 5760.0
Max. days for which position may stay open = 47

Return on investment (If calls are exercised)

Initial investment = 22136.0
Absolute return = 1864.0
Percentage return = 8.42%
Annualized percentage return = 65.38%

Break even Information

Break even price point = 27.67
Break even buffer percentage = 20.64%

Detailed Calculations & Explanation

Stock Leg (Buy)
Total money spent = price per share * number of shares
Total money spent = 34.87 * 800 = 27896.0

Option Leg (Sell)
Total money received = number of sold calls * 100 * call premium
Total money received = 8 * 100 * 7.2 = 5760.0

Transaction
Initial investment = Total money spent - Total money received
Initial investment = 27896.0 - 5760.0 = 22136.0

ROI calculations (If calls get exercised)
Money received upon exercise = (number of sold calls * 100 * strike price)
Money received upon exercise = 8 * 100 * 30.0 = 24000.0
Absolute returns = Money received upon exercise - Initial investment
Absolute returns = 24000.0 - 22136.0 = 1864.0
Percentage returns = 100 * (Absolute Returns/Initial investment)
Percentage returns = 100 * (1864.0/22136.0) = 8.42%
Annualized percentage returns = Percentage returns * 365/Max. days for which position may stay open
Annualized percentage returns = 8.42 * 365/47 = 65.38%

Break Even Information
Break-even point = Initial investment / Number of shares
Break-even point = 22136.0 / 800 = 27.67
Break-even buffer percentage = 100 * (Current price - Break-even point) / Current price
Break-even buffer percentage = 100 * (34.87 - 27.67) / 34.87 = 20.64%
This means that this position can wither a 20.64% drop in stock's price before losing any money.

The position will be watched closely and liquidated if it starts to hover around the break even point. A fall in the stock price till the strike price is expected to be compensated linearly by corresponding fall in the option's premium (thereby maintaining a balance and avoiding drastic losses if liquidity is desired).
The current portfolio details can be accessed here.

Disclaimer: The content of this blog is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Options involve risk and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options.

Opened (ROH) January 2009 covered call position for ROHM HAAS CO

2009-01-05T22:03:00.001-08:00

A new covered calls position was established on January 5, 2009 with purchase of 400 shares of "ROHM HAAS CO" (ROH). Here are the details.

Transaction Date = 20090105
Ticker = (ROH)
Company Name = ROHM HAAS CO

Stock Leg (Buy)

Number of shares purchased = 400
Price per share = 63.82
Total money spent = 25528.0

Option Leg (Sell)

Call Symbol = ROHAK
Number of sold calls = 4
Strike price = 55.0
Strike date = 20090116
Call premium = 12.0
Total money received = 4800.0
Max. days for which position may stay open = 12

Return on investment (If calls are exercised)

Initial investment = 20728.0
Absolute return = 1272.0
Percentage return = 6.13%
Annualized percentage return = 186.45%

Break even Information

Break even price point = 51.82
Break even buffer percentage = 18.8%

Detailed Calculations & Explanation

Stock Leg (Buy)
Total money spent = price per share * number of shares
Total money spent = 63.82 * 400 = 25528.0

Option Leg (Sell)
Total money received = number of sold calls * 100 * call premium
Total money received = 4 * 100 * 12.0 = 4800.0

Transaction
Initial investment = Total money spent - Total money received
Initial investment = 25528.0 - 4800.0 = 20728.0

ROI calculations (If calls get exercised)
Money received upon exercise = (number of sold calls * 100 * strike price)
Money received upon exercise = 4 * 100 * 55.0 = 22000.0
Absolute returns = Money received upon exercise - Initial investment
Absolute returns = 22000.0 - 20728.0 = 1272.0
Percentage returns = 100 * (Absolute Returns/Initial investment)
Percentage returns = 100 * (1272.0/20728.0) = 6.13%
Annualized percentage returns = Percentage returns * 365/Max. days for which position may stay open
Annualized percentage returns = 6.13 * 365/12 = 186.45%

Break Even Information
Break-even point = Initial investment / Number of shares
Break-even point = 20728.0 / 400 = 51.82
Break-even buffer percentage = 100 * (Current price - Break-even point) / Current price
Break-even buffer percentage = 100 * (63.82 - 51.82) / 63.82 = 18.8%
This means that this position can wither a 18.8% drop in stock's price before losing any money.

The position will be watched closely and liquidated if it starts to hover around the break even point. A fall in the stock price till the strike price is expected to be compensated linearly by corresponding fall in the option's premium (thereby maintaining a balance and avoiding drastic losses if liquidity is desired).
The current portfolio details can be accessed here.

Disclaimer: The content of this blog is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Options involve risk and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options.

Opened (GNW) January 2009 covered call position for GENWORTH FINANCIA

2009-01-05T21:54:00.001-08:00

A new covered calls position was established on January 5, 2009 with purchase of 5000 shares of "GENWORTH FINANCIA" (GNW). Here are the details.

Transaction Date = 20090105
Ticker = (GNW)
Company Name = GENWORTH FINANCIA

Stock Leg (Buy)

Number of shares purchased = 5000
Price per share = 2.83
Total money spent = 14150.0

Option Leg (Sell)

Call Symbol = GNWAZ
Number of sold calls = 50
Strike price = 2.5
Strike date = 20090116
Call premium = 0.5
Total money received = 2500.0
Max. days for which position may stay open = 12

Return on investment (If calls are exercised)

Initial investment = 11650.0
Absolute return = 850.0
Percentage return = 7.29%
Annualized percentage return = 221.73%

Break even Information

Break even price point = 2.33
Break even buffer percentage = 17.66%

Detailed Calculations & Explanation

Stock Leg (Buy)
Total money spent = price per share * number of shares
Total money spent = 2.83 * 5000 = 14150.0

Option Leg (Sell)
Total money received = number of sold calls * 100 * call premium
Total money received = 50 * 100 * 0.5 = 2500.0

Transaction
Initial investment = Total money spent - Total money received
Initial investment = 14150.0 - 2500.0 = 11650.0

ROI calculations (If calls get exercised)
Money received upon exercise = (number of sold calls * 100 * strike price)
Money received upon exercise = 50 * 100 * 2.5 = 12500.0
Absolute returns = Money received upon exercise - Initial investment
Absolute returns = 12500.0 - 11650.0 = 850.0
Percentage returns = 100 * (Absolute Returns/Initial investment)
Percentage returns = 100 * (850.0/11650.0) = 7.29%
Annualized percentage returns = Percentage returns * 365/Max. days for which position may stay open
Annualized percentage returns = 7.29 * 365/12 = 221.73%

Break Even Information
Break-even point = Initial investment / Number of shares
Break-even point = 11650.0 / 5000 = 2.33
Break-even buffer percentage = 100 * (Current price - Break-even point) / Current price
Break-even buffer percentage = 100 * (2.83 - 2.33) / 2.83 = 17.66%
This means that this position can wither a 17.66% drop in stock's price before losing any money.

The position will be watched closely and liquidated if it starts to hover around the break even point. A fall in the stock price till the strike price is expected to be compensated linearly by corresponding fall in the option's premium (thereby maintaining a balance and avoiding drastic losses if liquidity is desired).
The current portfolio details can be accessed here.

Disclaimer: The content of this blog is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Options involve risk and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options.

Some more resources

2009-01-02T19:54:00.000-08:00

You may find these both valuable and interesting. Enjoy..

Let me know if you know of any more resources that you would like to share.

Opened (CHK) February 2009 covered call position for CHESAPEAKE ENERGY

2009-01-02T12:39:00.001-08:00

A new covered calls position was established on January 2, 2009 with purchase of 1000 shares of "CHESAPEAKE ENERGY" (CHK). Here are the details.

Transaction Date = 20090102
Ticker = (CHK)
Company Name = CHESAPEAKE ENERGY

Stock Leg (Buy)

Number of shares purchased = 1000
Price per share = 16.92
Total money spent = 16920.0

Option Leg (Sell)

Call Symbol = CHKBC
Number of sold calls = 10
Strike price = 15.0
Strike date = 20090220
Call premium = 3.1
Total money received = 3100.0
Max. days for which position may stay open = 50

Return on investment (If calls are exercised)

Initial investment = 13820.0
Absolute return = 1180.0
Percentage return = 8.53%
Annualized percentage return = 62.26%

Break even Information

Break even price point = 13.82
Break even buffer percentage = 18.32%

Detailed Calculations & Explanation

Stock Leg (Buy)
Total money spent = price per share * number of shares
Total money spent = 16.92 * 1000 = 16920.0

Option Leg (Sell)
Total money received = number of sold calls * 100 * call premium
Total money received = 10 * 100 * 3.1 = 3100.0

Transaction
Initial investment = Total money spent - Total money received
Initial investment = 16920.0 - 3100.0 = 13820.0

ROI calculations (If calls get exercised)
Money received upon exercise = (number of sold calls * 100 * strike price)
Money received upon exercise = 10 * 100 * 15.0 = 15000.0
Absolute returns = Money received upon exercise - Initial investment
Absolute returns = 15000.0 - 13820.0 = 1180.0
Percentage returns = 100 * (Absolute Returns/Initial investment)
Percentage returns = 100 * (1180.0/13820.0) = 8.53%
Annualized percentage returns = Percentage returns * 365/Max. days for which position may stay open
Annualized percentage returns = 8.53 * 365/50 = 62.26%

Break Even Information
Break-even point = Initial investment / Number of shares
Break-even point = 13820.0 / 1000 = 13.82
Break-even buffer percentage = 100 * (Current price - Break-even point) / Current price
Break-even buffer percentage = 100 * (16.92 - 13.82) / 16.92 = 18.32%
This means that this position can wither a 18.32% drop in stock's price before losing any money.

The position will be watched closely and liquidated if it starts to hover around the break even point. A fall in the stock price till the strike price is expected to be compensated linearly by corresponding fall in the option's premium (thereby maintaining a balance and avoiding drastic losses if liquidity is desired).
The current portfolio details can be accessed here.

Disclaimer: The content of this blog is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Options involve risk and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options.

Opened (AVB) February 2009 covered call position for AVALONBAY CMTYS

2009-01-02T11:45:00.001-08:00

A new covered calls position was established on January 2, 2009 with purchase of 400 shares of "AVALONBAY CMTYS" (AVB). Here are the details.

Transaction Date = 20090102
Ticker = (AVB)
Company Name = AVALONBAY CMTYS

Stock Leg (Buy)

Number of shares purchased = 400
Price per share = 61.26
Total money spent = 24504.0

Option Leg (Sell)

Call Symbol = AZBBJ
Number of sold calls = 4
Strike price = 50.0
Strike date = 20090220
Call premium = 15.2
Total money received = 6080.0
Max. days for which position may stay open = 50

Return on investment (If calls are exercised)

Initial investment = 18424.0
Absolute return = 1576.0
Percentage return = 8.55%
Annualized percentage return = 62.41%

Break even Information

Break even price point = 46.06
Break even buffer percentage = 24.81%

Detailed Calculations & Explanation

Stock Leg (Buy)
Total money spent = price per share * number of shares
Total money spent = 61.26 * 400 = 24504.0

Option Leg (Sell)
Total money received = number of sold calls * 100 * call premium
Total money received = 4 * 100 * 15.2 = 6080.0

Transaction
Initial investment = Total money spent - Total money received
Initial investment = 24504.0 - 6080.0 = 18424.0

ROI calculations (If calls get exercised)
Money received upon exercise = (number of sold calls * 100 * strike price)
Money received upon exercise = 4 * 100 * 50.0 = 20000.0
Absolute returns = Money received upon exercise - Initial investment
Absolute returns = 20000.0 - 18424.0 = 1576.0
Percentage returns = 100 * (Absolute Returns/Initial investment)
Percentage returns = 100 * (1576.0/18424.0) = 8.55%
Annualized percentage returns = Percentage returns * 365/Max. days for which position may stay open
Annualized percentage returns = 8.55 * 365/50 = 62.41%

Break Even Information
Break-even point = Initial investment / Number of shares
Break-even point = 18424.0 / 400 = 46.06
Break-even buffer percentage = 100 * (Current price - Break-even point) / Current price
Break-even buffer percentage = 100 * (61.26 - 46.06) / 61.26 = 24.81%
This means that this position can wither a 24.81% drop in stock's price before losing any money.

The position will be watched closely and liquidated if it starts to hover around the break even point. A fall in the stock price till the strike price is expected to be compensated linearly by corresponding fall in the option's premium (thereby maintaining a balance and avoiding drastic losses if liquidity is desired).
The current portfolio details can be accessed here.

Disclaimer: The content of this blog is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Options involve risk and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options.

Happy New Year

2009-01-01T04:03:00.000-08:00

Happy new year to all of you.
May this year be better than the last one.

Wishing all of you best of health, wealth and happiness.

Opened (AKS) Feb 2009 covered calls position for AK STEEL HLDG CO

2008-12-30T22:01:00.000-08:00

A new covered calls position was established on December 30, 2008 with purchase of 2000 shares of "AK STEEL HLDG CO (AKS).

Quick Summary
(date, ticker, num_shares, price per share, shares money out, strike date, strike price, premium, options money in, total money out) = (20081230, AKS, 2000, 8.85, 17700, 20090220, 7.50, 2.20, 4400, 13300)

Detailed Information

Stock Leg (Buy)

Stock ticker = AKS
Company name = "AK STEEL HLDG CO"
Number of shares bought = 2000
Price per share = 8.85
Total money spent = 17700

Option Leg (Sell)

Call Symbol = ASJBU
Strike date = 20090220
Strike price = 7.50
Number of calls sold = 20
Premium per call = 2.20
Total call premium received = 4400

Transaction

Total money out = (17700 - 4400) = 13300
Initial investment = 13300

Returns (If calls get exercised)

Absolute returns = 15000 (strike price * num_shares) - 13300 (Initial investment) = 1700
Percentage returns = (absolute returns/initial investment * 100) = 12.78%
Max. number of days position will be open = 20090220 (strike date) - 20081229 (transaction date) = 53
Annual percentage returns (Normalized returns over 365 days) = (12.78 * 365 / 53) = 88.01%

Break Even Information

Break-even point = 13300 (Initial investment)
Break-even buffer percentage = 8.85 (current price) - 6.65 (break even point/num_shares))/8.85 * 100) = 24.86% [This means that this position can wither a 24.86% drop in stock's price before losing any money).

Date (position established): 2008/12/30

The position will be watched closely and liquidated if it starts to hover around the break even point. A fall in the stock price till the strike price is expected to be compensated linearly by corresponding fall in the option's premium (thereby maintaining a balance and avoiding drastic losses if liquidity is desired).

The current portfolio details can be accessed here.

Disclaimer: The content of this blog is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Options involve risk and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options.

Opened (PLD) Feb 2009 covered calls position for Prologis SBI

2008-12-30T21:56:00.000-08:00

A new covered calls position was established on December 30, 2008 with purchase of 2000 shares of "Prologis SBI" (PLD).

Quick Summary
(date, ticker, num_shares, price per share, shares money out, strike date, strike price, premium, options money in, total money out) = (20081230, PLD, 2000, 12.36, 24720, 20090220, 10.0, 3.50, 7000, 17720)

Detailed Information

Stock Leg (Buy)

Stock ticker = PLD
Company name = "Prologis SBI"
Number of shares bought = 2000
Price per share = 12.36
Total money spent = 24720

Option Leg (Sell)

Call Symbol = PADBB
Strike date = 20090220
Strike price = 10.0
Number of calls sold = 20
Premium per call = 3.50
Total call premium received = 7000

Transaction

Total money out = (24720 - 7000) = 17720
Initial investment = 17720

Returns (If calls get exercised)

Absolute returns = 20000 (strike price * num_shares) - 17720 (Initial investment) = 2280
Percentage returns = (absolute returns/initial investment * 100) = 12.87%
Max. number of days position will be open = 20090220 (strike date) - 20081229 (transaction date) = 53
Annual percentage returns (Normalized returns over 365 days) = (12.78 * 365 / 53) = 88.63%

Break Even Information

Break-even point = 17720 (Initial investment)
Break-even buffer percentage = 12.36 (current price) - 8.86 (break even point/num_shares))/8.86 * 100) = 28.32% [This means that this position can wither a 28.32% drop in stock's price before losing any money).

Established (M) Feb 2009 covered calls position

2008-12-29T21:43:00.000-08:00

Quick Summary
(date, ticker, num_shares, price per share, shares money out, strike date, strike price, premium, options money in, total money out) = (20081229, M, 2000, 8.89, 17780, 20090220, 7.5, 2.20, 4400, 13380)

Detailed Information

Stock Leg (Buy)

Stock ticker = M
Company name = "Macy's Inc"
Number of shares bought = 2000
Price per share = 8.89
Total money spent = 17780

Option Leg (Sell)

Call Symbol = MBU
Strike date = 20090220
Strike price = 7.5
Number of calls sold = 20
Premium per call = 2.20
Total call premium received = 4400

Transaction

Total money out = (17780- 4400) = 13380
Initial investment = 13380

Returns (If calls get exercised)

Absolute returns = 15000 (strike price * num_shares) - 13380 (Initial investment) = 1620
Percentage returns = (absolute returns/initial investment * 100) = 12.11%
Max. number of days position will be open = 20090220 (strike date) - 20081229 (transaction date) = 54
Annual percentage returns (Normalized returns over 365 days) = (12.11 * 365 / 54) = 81.85%

Break Even Information

Break-even point = 13380 (Initial investment)
Break-even buffer percentage = 8.89 (current price) - 6.69 (break even point/num_shares))/8.89 * 100) = 24.75% [This means that this position can wither a 24.75% drop in stock's price before losing any money).

Date (position established): 2008/12/29

The position will be watched closely and liquidated if it starts to hover around the break even point. A fall in the stock price till the strike price is expected to be compensated linearly by corresponding fall in the option's premium (thereby maintaining a balance and avoiding drastic losses if liquidity is desired).

The current portfolio details can be accessed here.

Disclaimer: The content of this blog is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Options involve risk and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options.

How are options priced and where do gains come from for these trades?

2008-12-27T22:46:00.000-08:00

I am no real expert on this. I can talk about my own understandings, but then I could be grossly wrong :)

As far as I know, the following 5 factors affect the price of an option.

Price of underlying stock also referred to as security or asset
Option strike price
Volatility of underlying stock.

This is amount of uncertainty associated with the stock's expected returns. Higher the volatility, more expensive the option will be.

Time to expiration

The price of an option decreases as it approaches the expiration date. This ties in with the volatility. Closer the option is to the expiration date, less volatile it becomes.

Risk free rate

I will not get into this. Usually, this is the amount of interest earned by U.S. treasury bills.

The option prices are determined by using a fairly involved formula proposed by Myron Scholes and Fischer Black in 1973.

So, assuming that the market does not move too much, there are a couple of things an investor can do to hunt for gains.

Look for volatile stocks. These are riskier kind, which means you could end up in big trouble by trading on these stocks. But if you can craft a careful strategy around these and if you are willing to watch the price movements very closely, the chances of a catastrophe can be reduced a bit.
Make time value of an option act in your favor. This can be done by being on the "selling side" of the options trade. The price of an option decays with time, thus acting in favor of the seller (which means if everything was to say the same, the seller can close the obligation by purchasing the sold option from the market and earning a profit by doing so)

The above 2 points form the basis of "stock picking" strategy for my portfolio. Are these risk-free in any way? Absolutely not. At the end of the day, I am trading risk for reward.
So, lets see how the portfolio does. I will keep you updated.

Structure of a closing trade

2008-12-27T12:38:00.000-08:00

All of the open positions are of the form (Buy stocks for company XYZ, Sell an equivalent number of calls)

A position will be closed because of one of the following reasons.

Expiration in the money

The sold call option gets exercised (or called). This can happen anytime up to the expiration date of the sold option. This will happen only if the market price of underlying stock (also known as security) happens to be above the strike price of the sold option (otherwise, the shares could just be bought off the market). When a call option gets exercised, the seller of the call (in this case us) are obligated to furnish shares of underlying stock to the buyer of the call (one who paid us the premium). In addition to the already paid premium, the buyer will also pay us an amount equal to strike price of the call option for this transaction. If the sold call option gets exercised, then the position will realize maximum profit (This number is posted on the blog when such a position is opened)

Expiration out of the money

The sold option does not get exercised. This will happen if the market price of the underlying stock happens to be less than the strike price of the option. It does not make sense for the buyer to exercise this option because he/she can obtain shares from the market at a lower price if interested in doing so. In any case, the premium that was paid earlier is ours to keep. There are multiple actions a seller can take under these circumstances such as

Exit the position by selling the shares. Depending on the break-even point for this position (This number is posted on the blog when such a position is opened), this may or may not end up in profit.
The seller can also chose to sell future calls for these shares and receive premium for the same. This is equivalent to opening up a new position (where the initial price of establishing the position needs to be adjusted to account for gains/losses incurred by current position)

Safety Check

I decide to close the position because it is not doing so well before the expiration date. I watch all of my open positions very closely and the moment a position starts hovering around its break-even point, I will close it. It can be done by selling the shares and buying the call options back from the market to close out any obligation.

I intend to publish the following information about each closing trade.

Type of closing trade (whether it was due to reasons 1, 2 or 3. See above). For reason 1 and 2, there is no need to buy any options to offset any obligations and thus all values will be 0 for that leg. Right now, I do not intend to resell call options (see second bullet point under reason 2) on any shares. This is mostly to keep things simple. If I start doing that in the future, I will write an updated post about it.

Stock Leg (Sell)

Stock ticker
Company name
Number of shares sold
Price per share
Total money received

Option Leg (Buy)

Call Symbol
Strike date
Strike price
Number of calls bough
Total money spent

Transaction

Total money in
Initial Investment
Net returns
Percentage returns
Annual percentage returns (Normalized returns over 365 days)

All of the prices will adhere to conservative view in terms of bid-ask spread. This means that a "buy" transaction will be recorded at "ask price" and a "sell" transaction will always be recorded at "bid price". In reality, an investor can do better than this by appropriately placing limit orders.

Al always, if you like any other fields to be added to this, please leave a comment or send an email.

A few good reads for understanding covered calls better

2008-12-26T22:59:00.000-08:00

These folks do much better justice to explaining the topic than I :)

Readers may find these links interesting and useful.

General information:
http://www.numa.com/derivs/ref/os-guide/os-035.htm
http://www.smartprofitsreport.com/archives/2008/covered-call-investing.html
http://www.optionseducation.org/strategy/covered_call.jsp

Deep in the money covered calls:
http://www.smartprofitsreport.com/Archives/2005/deep-in-the-money-covered-calls180.html

LEAPS & covered calls:
http://www.investopedia.com/articles/optioninvestor/04/021104.asp
http://thefinancialwhiz.com/2007/02/04/selling-covered-calls-against-leaps-positions/

Let me know if you know of any other links and I will update the post.

How to compute current value of the portfolio?

2008-12-26T22:04:00.001-08:00

A lot of you have asked about how I intend to compute value of the portfolio at any given time. I will use a very simple method to determine that.

Let me explain:

At any point of time, the portfolio has some free cash and a list of currently open trades. The value of the free cash stays the same for determination :). Now, each trade is of the following nature:

Buy XYZ stock
Sell equivalent number of calls on XYZ stock.

The value of this trade would be the cost incurred to close it (at the current time) Closing this trade would mean:

Selling XYZ stock
Buying an equivalent number of calls for XYZ stock

As usual, I will consider conservative points of the bid-ask spreads for both of these legs. In reality, a better price point may be reached by appropriately placing limits on the orders.

Does this sound good? Do you have any better ideas to measure the value? I would love to hear from you. Please either leave a comment or send me an email in case you have any further suggestions.

Established PRU Mar 2009 covered calls position

2008-12-26T14:44:00.000-08:00

Quick Summary
(date, ticker, num_shares, price per share, shares money out, strike date, strike price, premium, options money in, total money out) = (20081226, PRU, 1000, 26.55, 26550, 20090320, 20, 9.40, 9400, 17150)

Detailed Information

Stock Leg (Buy)

Stock ticker = PRU
Company name = "Prudential Financial Inc."
Number of shares bought = 1000
Price per share = 26.55
Total money spent = 26550

Option Leg (Sell)

Call Symbol = PRUCX
Strike date = 20090320
Strike price = 20
Number of calls sold = 10
Premium per call = 9.40
Total call premium received = 9400

Transaction

Total money out = (26550 - 9400) = 17150
Initial investment = 17150

Returns (If calls get exercised)

Absolute returns = 20000 (strike price * num_shares) - 17150 (Initial investment) = 2850
Percentage returns = (absolute returns/initial investment * 100) = 16.62%
Max. number of days position will be open = 20090320 (strike date) - 20081226 (transaction date) = 85
Annual percentage returns (Normalized returns over 365 days) = (16.62 * 365 / 85) = 71.36%

Break Even Information

Break-even point = 17150 (Initial investment)/1000 (num_shares) = 17.15
Break-even buffer percentage = (26.55 (current price) - 17.15 (break even point))/26.55 * 100) = 35.40% [This means that this position can wither a 35.40% drop in stock's price before losing any money).

Date (position established): 2008/12/26

The position will be watched closely and liquidated if it starts to hover around the break even point. A fall in the stock price till the strike price is expected to be compensated linearly by corresponding fall in the option's premium (thereby maintaining a balance and avoiding drastic losses if liquidity is desired).

The current portfolio details can be accessed here.

Disclaimer: The content of this blog is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Options involve risk and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options.

Established UAUA Mar 2009 covered calls position

2008-12-26T14:29:00.000-08:00

Quick Summary
(date, ticker, num_shares, price per share, shares money out, strike date, strike price, premium, options money in, total money out) = (20081226, UAUA, 2000, 10.51, 21020, 20090320, 7.50, 4.20, 8400, 12620)

Detailed Information

Stock Leg (Buy)

Stock ticker = UAUA
Company name = "UAL Corporation"
Number of shares bought = 2000
Price per share = 10.51
Total money spent = 21020

Option Leg (Sell)

Call Symbol = UALCU
Strike date = 20090320
Strike price = 7.50
Number of calls sold = 20
Premium per call = 4.20
Total call premium received = 8400

Transaction

Total money out = (21020 - 8400) = 12620
Initial investment = 12620

Returns (If calls get exercised)

Absolute returns = 15000 (strike price * num_shares) - 12620 (Initial investment) = 2380
Percentage returns = (absolute returns/initial investment * 100) = 18.86%
Max. number of days position will be open = 20090320 (strike date) - 20081226 (transaction date) = 85
Annual percentage returns (Normalized returns over 365 days) = (18.86 * 365 / 85) = 80.98%

Break Even Information

Break-even point = 12620 (Initial investment)/2000 (num_shares) = 6.31
Break-even buffer percentage = (10.51 (current price) - 6.31 (break even point))/10.51 * 100) = 39.96% [This means that this position can wither a 39.96% drop in stock's price before losing any money).

Established WFT Feb 2009 covered calls position

2008-12-26T14:15:00.000-08:00

Quick Summary
(date, ticker, num_shares, price per share, shares money out, strike date, strike price, premium, options money in, total money out) = (20081226, WFT, 2000, 9.3, 18600, 20090220, 7.5, 2.50, 5000, 13600)

Detailed Information

Stock Leg (Buy)

Stock ticker = WFT
Company name = "Weatherford International Ltd"
Number of shares bought = 2000
Price per share = 9.30
Total money spent = 18600

Option Leg (Sell)

Call Symbol = WFTBP
Strike date = 20090220
Strike price = 7.5
Number of calls sold = 20
Premium per call = 2.50
Total call premium received = 5000

Transaction

Total money out = (18600- 5000) = 13600
Initial investment = 13600

Returns (If calls get exercised)

Absolute returns = 15000 (strike price * num_shares) - 13600 (Initial investment) = 1400
Percentage returns = (absolute returns/initial investment * 100) = 10.29%
Max. number of days position will be open = 20090220 (strike date) - 20081224 (transaction date) = 57
Annual percentage returns (Normalized returns over 365 days) = (10.29 * 365 / 57) = 65.89%

Break Even Information

Break-even point = 13600 (Initial investment)
Break-even buffer percentage = 9.30 (current price) - 6.80 (break even point/num_shares))/9.30 * 100) = 26.88% [This means that this position can wither a 26.88% drop in stock's price before losing any money).

Established BTU Jan 2009 covered calls position

2008-12-26T11:43:00.000-08:00

Quick Summary
(date, ticker, num_shares, price per share, shares money out, strike date, strike price, premium, options money in, total money out) = (20081226, BTU, 1000, 21.75, 21750, 20090116, 20, 3.0, 3000, 18750)

Detailed Information

Stock Leg (Buy)

Stock ticker = BTU
Company name = "Peabody Energy Corp."
Number of shares bought = 1000
Price per share = 21.75
Total money spent = 21750

Option Leg (Sell)

Call Symbol = BNUAD
Strike date = 20090116
Strike price = 20
Number of calls sold = 10
Premium per call = 3.0
Total call premium received = 3000

Transaction

Total money out = (21750 - 3000) = 18750
Initial investment = 18750

Returns (If calls get exercised)

Absolute returns = 20000 (strike price * num_shares) - 18750 (Initial investment) = 1250
Percentage returns = (absolute returns/initial investment * 100) = 6.67%
Max. number of days position will be open = 20090116 (strike date) - 20081224 (transaction date) = 22
Annual percentage returns (Normalized returns over 365 days) = (8.75 * 365 / 22) = 110.66%

Break Even Information

Break-even point = 18750 (Initial investment)
Break-even buffer percentage = 21.75 (current price) - 18.75 (break even point/num_shares))/21.75 * 100) = 13.79% [This means that this position can wither a 13.79% drop in stock's price before losing any money).

Established ZION Jan 2009 covered calls position

2008-12-26T11:33:00.000-08:00

Quick Summary
(date, ticker, num_shares, price per share, shares money out, strike date, strike price, premium, options money in, total money out) = (20081226, ZION, 1000, 22.09, 22090, 20090116, 20, 3.70, 3700, 18390)

Detailed Information

Stock Leg (Buy)

Stock ticker = ZION
Company name = "Zions Bancorp."
Number of shares bought = 1000
Price per share = 22.09
Total money spent = 22090

Option Leg (Sell)

Call Symbol = ZNQAU
Strike date = 20090116
Strike price = 20
Number of calls sold = 10
Premium per call = 3.70
Total call premium received = 3700

Transaction

Total money out = (22090 - 3700) = 18390
Initial investment = 18390

Returns (If calls get exercised)

Absolute returns = 20000 (strike price * num_shares) - 18390 (Initial investment) = 1610
Percentage returns = (absolute returns/initial investment * 100) = 8.75%
Max. number of days position will be open = 20090116 (strike date) - 20081224 (transaction date) = 22
Annual percentage returns (Normalized returns over 365 days) = (8.75 * 365 / 22) = 145.17%

Break Even Information

Break-even point = 18390 (Initial investment)
Break-even buffer percentage = 22.09 (current price) - 18.39 (break even point/num_shares))/22.09 * 100) = 16.74% [This means that this position can wither a 16.74% drop in stock's price before losing any money).

Happy Holidays

2008-12-25T14:40:00.000-08:00

Happy Holidays everyone.
Be safe and have fun.

Best wishes from us!

Established MCO Feb 2009 covered calls position

2008-12-24T13:09:00.000-08:00

Quick Summary
(date, ticker, num_shares, price per share, shares money out, strike date, strike price, premium, options money in, total money out) = (20081224, MCO, 1000, 20.88, 20880, 20090220, 17.5, 4.90, 4900, 15980)

Detailed Information

Stock Leg (Buy)

Stock ticker = MCO
Company name = "Moody's Corp"
Number of shares bought = 1000
Price per share = 20.88
Total money spent = 20880

Option Leg (Sell)

Call Symbol = MCOBW
Strike date = 20090220
Strike price = 17.5
Number of calls sold = 10
Premium per call = 4.90
Total call premium received = 4900

Transaction

Total money out = (20880- 4900) = 15980
Initial investment = 15980

Returns (If calls get exercised)

Absolute returns = 17500 (strike price * num_shares) - 15980 (Initial investment) = 1520
Percentage returns = (absolute returns/initial investment * 100) = 9.51%
Max. number of days position will be open = 20090220 (strike date) - 20081224 (transaction date) = 59
Annual percentage returns (Normalized returns over 365 days) = (11.23 * 365 / 59) = 42.71%

Break Even Information

Break-even point = 15980 (Initial investment)
Break-even buffer percentage = 20.88 (current price) - 15.98 (break even point/num_shares))/20.88 * 100) = 23.47% [This means that this position can wither a 23.47% drop in stock's price before losing any money).

Date (position established): 2008/12/24

The position will be watched closely and liquidated if it starts to hover around the break even point. A fall in the stock price till the strike price is expected to be compensated linearly by corresponding fall in the option's premium (thereby maintaining a balance and avoiding drastic losses if liquidity is desired).

The current portfolio details can be accessed here.

Disclaimer: The content of this blog is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Options involve risk and are not suitable for all investors. For more information, please read the Characteristics and Risks of Standardized Options.