Monday, June 4, 2012
June Adjustments: ADM and GLW
On June 1, last Friday, I started out the month with two adjustments, rolling out positions on ADM and GLW. Although current market positions are requiring me to go out into the back months on some of these transactions, I have been able to find new positions that hold my strike prices steady – important, because total returns in Rescue My IRA come from three sources: stock gains, dividends, and option premiums.
Here’s the analysis.
I’ve held contracts at a strike of 32 on this 300-share position, doing the BTC for June and STO for July just this last Friday.
Total option premiums: $345.74
Total dividend payments (May ex-dividend): $52.50
Total stock gain at $32.00: $335.94
Total, absolute gain on the position: $734.18
Total, absolute return percentage ($734.18/$9,246.88): 7.94%
Annualized total return percentage (held approx 90 days): 32.20%
Friday’s transaction established the sixth contract I have written on this 700-share position. Currently at a strike price of 13, I have written contracts at 14 in the past.
Total option premiums: $1,068.16
Total dividend payments: $97.50
Total stock gain at $13.00: -$159.88
Total, absolute gain on the position: $1,005.78
Total, absolute return percentage ($1,005.78/$9,241.88): 10.55%
Annualized total return percentage (held 240 days): 14.71%
If this position is assigned in August, the 14.71% exceeds my goal of achieving a 12% return annually on these investments. If that contract is not called away, then I stand to collect another dividend payment of $57.50 total, and a premium payment. In that event, it appears likely that GLW will continue meet my objectives.