MAS: Not Called Early

A few weeks back I posted about my new 200 share MAS position, which I established with some covered call and dividend proceeds last month. 

In the introductory post about this position, I explained that I was trying an in the money call with an imminent ex-dividend date, anticipating that the position would be called away for the dividend claim.  If that were to happen, I would have been out of the position in less than a week.

As it turns out, the position wasn’t called, even though the MAS shares had gotten deeper into the money.  It appears I will hold the shares until the contract expires later this month.  The good part of that is that I stand to collect the dividend and it will add to the positive return on these shares.  My absolute return has increased although the annualized return went down because of the longer holding period – but I can live with that.

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)

7/3/2012 MAS went ex-dividend, not called away ($15.00)

Net Profit:

1) Options Income:  = $130.49
2) Dividend Income: Ex-date was 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 + $15.00 - $65.00 = $80.49
Absolute Return on Investment: ($80.49/$2,447.00) = 3.29%
Annualized Return if Assigned (20 days):  3.29%*(365/20) = 60.03%
On the ex-dividend date, MAS was in the money.