Thursday, June 7, 2012
Three Adjustments: Rolling out GE, HAL, and WAG
With the market continuing its downward trend, I decided I would proceed with the strategy of taking profits on call premiums via the roll-out activities I had begun last week. I have completed six roll-out transactions since then, generating enough cash flow to add another 100 shares of CSX. Today, I’ll summarize three of the new roll-outs, I’ll follow-up with another post to show the analysis of the other three very soon – also, I will make a note of the revised CSX position at that time.
With the completion of these roll-outs, I have no June contracts left in the portfolio. There are six positions set to expire in July, two Augusts, three Septembers, and two Octobers. For the most part, I have sought to maintain the original strike prices, although I have made exceptions by selling at a lower strike on the GLW, as noted last week, and on SPLS, which I will write about next time.
Here’s the analysis of the three positions.
This is the second time I’ve held a position in GE; this time I have 500 shares, and I’ve been selling calls with a strike price of 20 against them. The current contract has a July expiration.
Total option premiums: $212.21
Total dividend payments (including the May ex-dividend): $170.00
Total stock gain at $20.00: $280.00
Total, absolute gain on the position: $662.21
Total, absolute return percentage ($662.21/$9,702.00): 6.83%
Annualized total return percentage (held approx 120 days): 20.76%
This 300 share position has really gotten beaten down in the current market. My basis is north of $34 and the shares are trading at $28, this meant I’ve gone out to a 35 Oct 2012 contract for a decent call premium. The upside there is I will likely collect another dividend – it goes ex-dividend in June and likely again in September.
Even though this one may just miss my 12% annual return target, I’ll sit tight on this long expiration date and see what happens by October.
Total option premiums: $393.13
Total dividend payments (counting June ex-date): $18.00
Total stock gain at $35.00: $182.92
Total, absolute gain on the position: $594.05
Total, absolute return percentage ($594.05/$10,299.90): 5.77%
Annualized total return percentage (held 200 days): 10.53%
This is another 300 share position where I’ve gone out to a 35 Oct 2012 contract, although the stock is not quite as beaten down as HAL. As with those shares, if I hold WAG that long I will collect another dividend – these shares passed an ex-dividend date in May and will have another in August. WAG is currently forecast to meet my 12% objective.
Total option premiums: $531.21
Total dividend payments (counting May ex-date): $90.00
Total stock gain at $35.00: $361.02
Total, absolute gain on the position: $982.23
Total, absolute return percentage ($982.23/$10,121.80): 9.70%
Annualized total return percentage (held 240 days): 14.76%