Monday, November 21, 2011

November Calls Expiration Results: COP

Last week, I took advantage of the turbulent market to roll-up and out on CSX and CMCSA, stocks that I had sold November calls against.  I sold December calls and closed the November positions. 

After doing this, I was left with only one November contract, COP 72.50 Nov 2011.  I was looking to roll-out to December with the same strike price on this position, but because the market continues to trend down on European news and on the pending failure of the Super Committee to reach a budget deal, I had to move out to Jan 2012 to meet my goals for the transaction.

I was able to sell to open on the COP 72.50 Jan 2012 for a net premium of $142.74.  This brings me back to a net gain on option premiums (COP was one of my learning experiences, I did a previous adjustment for a net debit); I have currently collected a total of $113.97 in premium on the COP shares, which I bought for $6,988. 

The January position also sets me up for the potential of collecting quarterly dividends, estimated at $66.00, with an ex-date of approximately January 13.  My capital gain on the stock if assigned will be approximately $490.00. 

If assigned and I collect the dividend, the absolute return on the shares would be $674.00, or 9.65%.  Annualized, this is just about 48% for an approximately 75 day holding period.

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