Monday, August 27, 2012
Two Adjustments: Rolling out HPQ and URS
I’ve made a couple of adjustments in the last week that I need to report here – roll-outs, where I closed current positions and sold new positions at the same strike price in later months.
In one case, HPQ, there’s a lesson learned. This was a position that worked on paper and met my criteria in every other way; however when I made the investment I failed to consider that there was an upcoming earnings announcement. After they reported a miss, the stock gapped down.
I still like the stock, and the premiums for the stock at my strike are pretty good, so I am continuing to hold the position, and generating income with option premiums.
The other adjustment was also a roll-out, for the URS position. I pushed the contract expiry out to January 2013. While this now means I have a lot of positions that will be held for an additional 120 to 150 days, I do have four positions expiring in September and a couple in October and November – so there will be plenty of trades.
Here’s a summary of these two adjustments:
Rolled out the 20 Sep to 20 Nov
Total Option Premiums: $316.98
Total Dividends (including forecast ex-dividend dates through contract): $52.80
Total Stock Gain (if assigned): $63.89
Total Absolute Gain on Position: $433.67
Absolute Return on Position: 5.48%
Annualized Return on Position (held 90 days): 22.21%
Rolled out and up the 40 Oct to 40 Jan
Total Option Premiums: $1,462.43
Total Dividends (including forecast ex-dividend dates through contract): $165.00
Total Stock Gain (if assigned): -$344.18
Total Absolute Gain on Position: $1,283.25
Absolute Return on Position: 8.11%
Annualized Return on Position (held 240 days): 12.33%
I should not that my original position in URS is 400 shares. I have a 35 Oct contract on 100 of the shares – and the returns estimated above include them. However, despite my poor judgment on that part of the position, the estimated annualized return still meets my goals for the Rescue My IRA account.