Here is an analysis of the second position I established with my rollover 401(k) funds: MSFT. Remember, the goal of the Rescue My IRA approach is to earn income in three ways from each position, whenever possible…through call premiums, capital appreciation, and dividends.
MSFT
12/30/2011 Bought 400 shares at average share price $25.99 (total $10,395.00)
12/30/2011 Sold 4 MSFT Feb 2012 27 at $0.40 (total $147.99)
Net Profit:
1) Options Income: = $147.99
2) Dividend Income: Ex-date is 2/14, $80.00
3) Capital Appreciation if assigned at $27: $387.00
12/30/2011 Bought 400 shares at average share price $25.99 (total $10,395.00)
12/30/2011 Sold 4 MSFT Feb 2012 27 at $0.40 (total $147.99)
Net Profit:
1) Options Income: = $147.99
2) Dividend Income: Ex-date is 2/14, $80.00
3) Capital Appreciation if assigned at $27: $387.00
Total Net Profit if Assigned and dividend collected: $147.99 + $80 + $387.00 = $614.99
Absolute Return on Investment: ($614.99/$10,395.00) = 5.92%
Annualized Return if Assigned (45 days): 5.92*(365/45) = 47.99%
Yesterday's closing price was $27.30, so the Feb 27 is currently in the money (ITM).
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