Monday, April 23, 2012
It's Finally over: NVS Called Away
As expected, my NVS shares were called away at expiration last week. This is a position I have regretted since I got into it (check out previous posts by searching the blog on NVS) – I finally have gotten rid of it.
The stock has a juicy annual dividend that first attracted me to it, and I bought a round lot before the ex-date. I sold a covered call against it, but I forgot some of the basics of my trading plan in doing so. When the stock dropped on the ex-date, which was close to the expiry date of my first position, I found it hard to establish a profitable next position and got in a rush, setting my next contract up for a loss.
Then the dividend payment came in, and it turns out this stock is subject to a foreign tax - so another nickel and dime taken away. In the end, I only lost $9.73 on the position, and that turns into about 1% on an annual basis. It’s a loss, but not so bad, and I really learned a lot from this one. Here’s the history:
NVS – 100 Shares, basis $57.26, 55 Apr 2012 assigned
Option Premiums (total): $84.23
Dividends Collected (net of foreign tax): $159.13
Stock Loss: -253.11
Absolute return -0.17%
Annualized return (60 days) -1.03%
I’m glad this is finally over with!