Monday, February 20, 2012

Another Bite of NOC

Knowing that Friday was options expiration for monthlies, and knowing that I had quite a few positions that would be called away, I figured I needed to get a couple of new positions established.  Even though the market is toppy just now, as long as I can find solid positions that pass my screen I will buy; in some cases, it pays to go to the well a second time, so I decided to add another 100 shares of NOC on Friday afternoon.  I also sold another May 62.50 on the new shares.

The new position is summarized as follows:


2/16/2012 Bought 100 shares at average share price $59.62 (total $5,961.75)
2/17/2012Bought 100 shares at average share price of $60.25 (total $6,024.50)
2/16/2012 Sold 1 NOC May 2012 62.50 at $0.94 (total $94.74)
2/17/2012 Sold 1 NOC May 2012 62.50 at $1.07 (total $106.74)
New share basis is for 200 shares is $59.93 per share

Net Profit:

1) Options Income:  = $201.48
2) Dividend Income: Ex-date is 2/23 (0.50 per share), $100.00
3) Capital Appreciation if assigned at $35:  $496.64

Total Net Profit if Assigned and dividend collected:  $201.48 + $100 + $496.64 = $798.12
Absolute Return on Investment: ($798.12/$11,986.25) = 6.66%
Annualized Return if Assigned (90 days):  6.66%*(365/90) = 27.00%
Yesterday, the date of purchase, NOC's closing price was out of the money (OTM).

As always, if the position is not assigned, I will continue to write covered calls against it until I earn the profit above, at a minimum.

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