Nov 2011 Covered Call Positions

I have two CC positions that will be held through the week.  At present, I have no plans to complete an adjustment on them, as there is no ex-dividend date on either before options expire this Friday, but I may reconsider in the case of CSX.  The positions are: 

• 2 CMCSA Nov 22.00
• 2 CSX Nov 22.50

What follows is a transaction history on each position, net of commissions.

CMCSA

11/9/2011 Purchased 200 shares at $21.89 (total $4,392)
11/9/2011 Sold 2 Nov 2011 22 at $0.43 total ($76.49)

Net Profit:

1) Options Income: $76.49
2) Dividend Income: $0.00 (ex-date is 12/30/2011)
3) Capital Appreciation (if assigned at $22): $11.00

Total Net Profit:  $86.49
Absolute Return on investment (purchase price) $86.49/$4,392 = 2.0%
Annualized Return if assigned (stock held ten days):  2.0 * (365/10) = 73.48%
As of the time of this post, the stock closed at $22.21, above the strike price of the option.

Lesson learned:  One of my colleagues has a rule that he will not execute a trade that does not generate at least $100 in net profit and an annualized return of 20%.  This trade met one requirement but did not meet the other, but I proceed because of the very short term.  Due to the impact of transaction costs, I think that having a dollar value threshhold is a good idea, so I am adopting the $100 rule; however, I am willing to accept an annualized return of at least 12% for my trades.  I will apply this rule for all future trades after November 2011.

CSX

11/7/2011 Purchased 200 shares at $21.71 (total $4,349)
11/7/2011 Sold 2 Nov 2011 22.50 at $0.24 total ($38.48)

Net Profit:

1) Options Income: $38.48
2) Dividend Income: $0.00 (ex-date is 11/28/2011)
3) Capital Appreciation (if assigned at $22.50): $169.00

Total Net Profit:  $207.48
Absolute Return on investment (purchase price) $207.48/$4,349= 4.78%
Annualized Return if assigned (stock held 12 days):  4.78% * (365/12) = 145.47%
As of the time of this post, the stock closed at $22.31, below the strike price of this option.