Tuesday, January 31, 2012

Opportunity for Adjustments on GE and ACM

I saw an opportunity in the market yesterday on two positions and decided to take aggressive action.  The positions were ACM and GE, and when I established the covered calls on them I had to sell pretty far out in the calendar.  I was able to move both up, and did the trades for an overall gain.

In the case of ACM, the position is pretty much a wash at this point.  It is a legacy in the portfolio from when I used to work there; I have 800 shares and the price basis is about $25/share.  Earlier I STO for 4 22.5 Mar and 4 25 Jun 2012s, which the intention of cashing these out since they don’t fit my trading plan.

With the shares rising of late, I rolled-up the 22.5 Mar to 25 Mar.  For the lower strike contract, I paid $612 to close the position, but got $88 back, plus the additional $1,000 if the contract is exercised.

In the case of GE, I had 4 18 Jun 2012 contracts.  They were in the money, and basically that investment was going to sit for another five months.  My basis in the shares is $16.17, so I decided I could spare a little money to move up to 18 February contracts.

The BTC cost me $628, but I got back $384 on the ITM February contracts.  My net on option premiums is -$27, but I collected dividends of $68 on the shares, and my capital gain if exercised is $712.  So I’m still in a good spot with this one.

Between the anticipated marginal capital gain on ACM, and the BTC/STO round trips, the total gain from this trading activity is $232.  When calculated against my account balance, the percent return is about 0.18%.  It’s moving in the right direction…and there will be some benefit to being able to put the cash back to work in GE’s case.  And I am glad that the ACM position is getting close to a wash.

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