New Position: CAT

My last post was about the loss I took while pruning the account of the unprofitable ADM position.  I’ve rolled those funds into a new position with CAT – shares I did well with earlier in the year.  The stock had taken quite a roll back from where it was when I was long on it, so I felt like this was a good entry price point.  I hope the shares will serve me well in recovering from the ADM trade.

Here’s the analysis: 

CAT

Transactions

8/8/2012 Bought 100 shares at share price $87.17 (total $8,716.99)
8/8/2012 Sold 1 CAT 90 NOV 2012 at $377.74

CAT has a dividend of approximately $0.52, going ex-dividend in October.  This stock has performed so strongly that there is a good chance of early assignment in October, but we shall see.

Estimated Net Profit:

1) Options Income:  = $377.74
2) Dividend Income: Ex-date in Oct 3, dividend is $0.52 ($52.00)
3) Capital Appreciation if assigned at $90.00:  $265.83

Total Net Profit if Assigned and dividend collected:  $377.74 + $53.00 + $265.83 = $695.57
Absolute Return on Investment: ($695.57/$8,716.99) = 7.98%
Annualized Return if Assigned (100 days):  7.98%*(365/100) = 29.13%