November Adjustments, Continued: SPLS, URS, and DOW

Last week, I mentioned that I was going to focus on managing Rescue My IRA according to my trading plan as a way to keep earning returns through what looks to be a volatile market despite – or in spite of – a tepid expansion.  Making things a bit more complex are the ongoing budget crisis in this country.

So this post will be about three more positions I’ve made adjustments on this month.  I still have a couple to report on and will get that post up soon.  Meanwhile, with the proceeds from these options and the F call assignment I need to find a new trade to complete the month.

Here’s a summary:

SPLS

Here is a stock that gets a great S&P rating, but has been trading out of the money since I established the position last February.  My solution has been to roll down and out the 500 share position to continue to produce a yield.  I’ll manage carefully to ensure a break-even or better result when I finally allow the stock to be called away.

Rolled out the 13 Dec to 12.50 Jan

Total Option Premiums:  $762.56

Total Dividends:  $259.00

Total Stock Gain (if assigned): -$1,555.60

Total Absolute Gain on Position: -534.04

Absolute Return on Position: Negative

In order to get this position to breakeven or better, I will need to sell the shares at $13 or better.  Assuming I will have one more adjustment before I terminate the trade, this seems doable.

URS

In contrast to SPLS, here is a 400 share position that has generated better than 10% between the call premiums and dividends that I have collected on it.  Plus, at the 40 strike there is a small stock gain, so this trade is going as you’d hope they all would.

Rolled out the 40 Jan to 40 April

Total Option Premiums:  $1,477.91

Total Dividends (including forecast ex-dividend dates through contract): $240.00

Total Stock Gain (if assigned): $155.82

Total Absolute Gain on Position: $1,873.73

Absolute Return on Position: 11.84%

Annualized Return on Position (held 330 days): 13.09%

So this position will meet my 12% goal, even if assigned under the current contract.

DOW

Here is a 300 share position that is working out according to plan.  I sold the 32 Dec in order to have a call premium that met my requirements for individual transactions (I like to net at least $100 where ever I can).  The tradeoff at that strike would have been a small stock loss but I fixed that with this trade.

Rolled out and up the 32 Dec to 33 Mar

Total Option Premiums:  $632.69

Total Dividends (including forecast ex-dividend dates through contract): $256.00

Total Stock Gain (if assigned): $327.47

Total Absolute Gain on Position: $1,216.16

Absolute Return on Position: 12.73%

Annualized Return on Position (held 270 days): 17.21%

As with URS, this position meets my goal of 12% return if assigned under this current contract.