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
Total:  -$9.73
Absolute return -0.17%
Annualized return (60 days) -1.03%

I’m glad this is finally over with!

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