Rolling out a URS Lot

When I wrote my monthly post yesterday, I realized that the URS position was up for some management.  A few months back I was concerned about the concentration of investment funds in this stock – I bought 400 shares, representing a slightly larger percentage of the portfolio than any other position.  Somewhere along the way I got the idea that I should pare it down by one lot, so I sold a 35 call and three 40 calls.

At a 35 strike, I would take a loss on that one lot, and it was enough that it would offset the potential gains on all three of the 40 lots.  That is the problem I set out to fix yesterday by rolling out and up the one lot, so that now all four of the URS lots are covered with Jan 40 calls.

This action sets the position up to meet my goal of 12% annualized, where previously I would have been short on this.  As the time value in the January call continues to erode, I may look at the April calls, which would extend my holding period to 330 days and give me one more shot at a quarterly dividend.  I will keep an eye out for an opportunity to do this – if the April trade generates $300 or so, it will meet my annualized goal for this position.

Here’s the analysis on the URS position:

URS

The URS position consists of 400 shares.  My basis is around $39.57 per share, and with the exception of the ill-advised 35 strike calls above, I have been selling 40 strikes and periodically rolling them out. 

Total option premiums:  $1,361.92

Total dividend payments (through the Jan options):  $180.00

Total stock gain at $40:  $155.82

Total, absolute gain on the position:  $1,697.74

Total, absolute return percentage ($1,697.74/$15,827):  10.73%

Annualized total return percentage (held approx 240 days):  16.31%