Saturday, February 11, 2012

Tongues will WAG: New Position

I saw a few articles that mentioned WAG as a recommend.  I added it to some stock research I was doing for the Rescue My IRA account, and as it turned out, it passed the screen (I’ll put a post up soon about that). 
After deciding that I could let my cash reserves run at 10 percent, down from 20, I had the capital available for a new position and added WAG (I guess I need a new post on the revisions to the trading plan also).  That made an otherwise dull trip to Dallas (dull because of the dearth of on-the-road recreation, the work down there was engaging!) just a little more interesting. 
I pulled the trigger on WAG because of the looming ex-date on February 15.  I would like another hat trick!  Here are the details:

2/7/2012 Bought 200 shares at average share price $33.58 (total $6,716.20)
2/7/2012 Sold 2 WAG Apr 2012 35 at $0.96 (total $182.49)

Net Profit:

1) Options Income:  = $182.49
2) Dividend Income: Ex-date is 2/15, $45.00
3) Capital Appreciation if assigned at $35:  $266.62

Total Net Profit if Assigned and dividend collected:  $182.49 + $45 + $266.62 = $494.11
Absolute Return on Investment: ($494.11/$6,716.20) = 7.36%
Annualized Return if Assigned (60 days):  7.36%*(365/60) = 44.76%
Yesterday's closing price was $34.54, so the Apr 35 is currently (just barely) out of the money (OTM).

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