Diversion

Friday, June 8, 2012

More Adjustments: ITW, NOC, and SPLS


Today’s post concludes the one I started yesterday concerning some recent roll-out positions.  I covered the GE, HAL, and WAG shares yesterday so today will be about ITW, NOC and SPLS. 

As I mentioned yesterday, the proceeds from these six roll-outs were enough to add another lot to my CSX position.  I will add a post on that one next week.  

And of course, there are still three weeks left to June – I’m sure I’ll have a few more trades to report by the end of the month.

Here’s the analysis of the three positions.

ITW

The ITW position consists of 200 shares.  My basis is around $56 per share, and the stock is trading near there.  I am selling 57.50 strikes and rolling them monthly. 

Total option premiums:  $554.45
Total dividend payments (including the forecast June ex-dividend):  $144.00
Total stock gain at $57.50:  $208.89
Total, absolute gain on the position:  $907.34
Total, absolute return percentage ($907.34/$11,274.00):  8.05%
Annualized total return percentage (held approx 150 days):  19.58%

NOC

This 200 share position has held its own in the current market.  I was satisfied with the results of my initial analysis, but had a few reservations about making a choice in the defense sector.  Live and learn.

Total option premiums:  $589.79
Total dividend payments (counting May ex-date):  $210.00
Total stock gain at $60.00:  -$3.36
Total, absolute gain on the position:  $796.35
Total, absolute return percentage ($796.35/$11,986.25):  6.64%
Annualized total return percentage (held 120 days):  20.21%

SPLS

I have a 500 share position in SPLS.  It has a four-star rating with S&P, so I thought it was a good opportunity back in February or so when I bought it, and I don’t mind owning it now.  It’s just that I can’t profitably write 17 strikes anymore.  So I’ve decided to compromise that objective and write in-the-money calls against the position while the stock is moving down.  This most recent trade is a 13 July; there is an ex-dividend date coming up in June, so there is a chance of an early call also.

I’ll take a loss if that happens.  But it will also give me $6,500 in cash to go bargain shopping with…

Total option premiums:  $425.11
Total dividend payments (counting June ex-date):  $105.00
Total stock loss at $13.00:  -$1,488.60
Total, absolute gain on the position:  -$958.49
Total, absolute return percentage -$958.49/$7,971.42):  Negative
Annualized total return percentage (held 240 days):  Negative

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