New Position: MAS

The proceeds from covered calls and dividends this month and last have been enough to provide the opportunity to add to one position – CSX, as I posted on previously – and to establish a new position in MAS, which I’ll post about here.

Since the amount invested in this 200 share position is relatively small, I decided to try something a couple of the other folks in the covered call community have told me about.  I sold in the money calls, which is even more significant because the stock has an ex-dividend date coming up before the contract expires.  The option is likely to be called early, and in this case it means I may be in and out of the position in a week 

We’ll see how that works out.  In the meantime, here’s the analysis: 

MAS

Transactions

6/26/2012 Bought 200 shares at average share price $12.24 (total $2,447.00)
6/26/2012 Sold 2 MAS JUL 2012 $13.00 at $0.70 (total $130.49)

Net Profit:

1) Options Income:  = $130.49
2) Dividend Income: Ex-date is July 3, dividend is $0.75 ($15.00)
3) Capital Appreciation if assigned at $12.00:  -$65.00

Total Net Profit if Assigned and dividend collected:  $130.49 + $0 - $65.00 = $65.49
Absolute Return on Investment: ($65.49/$2,447.00) = 2.68%
Annualized Return if Assigned (7 days):  2.68%*(365/7) = 139.55%

On the day of purchase, MAS was in the money.