Sunday, November 18, 2012

Called Away on F

This is one of those cases where I wish I could put more trades together like this more often, but my little position in Ford, symbol “F,” has been called away during the November expiration.  This was a 60-day trade, and I set it up as basically an in-the-money trade – the average share price was just a little more than $10, and I sold November 10 calls when I established the position with some proceeds from call assignments back in September.

Basically, I was trading for the option premium and a dividend, at first with the hope of an early assignment – which should have happened but didn’t – because I would have turned the profit a few weeks early.  As it happened, because the call wasn’t assigned, I was able to collect the dividend on these shares as well. 

All totaled, I netted $128.38 on the trade, which had a basis of $4,022.50.  That’s 3.19 percent that I collected over a 60 day investment, working out to an annualized return – remember I calculate this simply as a metric to help evaluate trades – of 19.42%, which exceeds my goal of a 12% return.

Here is the record on this position, as usual, net of fees and commissions:


9/18/2012 Bought 400 shares at an average price of $10.06, total position basis $4,022.50.
11/16/2012 Sold on assignment 400 shares at $3,982.89, average share price $9.96.
Total stock gain(net of commissions):  -$39.61

9/18/2012 Sold to open 4 10 Nov 2012 contracts, net $147.99
Total options income:  $147.99

Total dividends collected:  $20.00

Net Profit:
1) Stock gains:  -$39.61
2) Options income:  $147.99
3) Dividend Income: $20.00

Total Net Profit after Assignment:  $128.38
Absolute Return on Investment: ($128.38/$4,022.50) = 3.19%
Annualized Return (60 days):  3.19%*(365/60) = 19.42%

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