Friday, December 21, 2012

Adjusting SPLS

On Wednesday and Thursday, the 19th and 20th of December, we had some good market days.  I used them to make an adjustment on SPLS, which I’ve been holding for a long time now.  It’s an underperforming member of the portfolio, and I am ready to spin out the 700 shares and get that capital reinvested. It’s a quality stock, but it just doesn’t seem to go anywhere.

My basis in the shares is $14.70 – an average share price.  I’ve sold covered calls at a $17 strike, and have systematically rolled the calls down and out so that I have generated a decent enough return with the premiums. I sold June 2013 $15 contracts most recently, but decided to close those and sell something closer in and at a lower strike, for the wash – now I have April $13s. 

I collect a nice dividend here too.  But to be honest, managing this position is no fun, and I’d like to be rid of it.  I’ll take the small loss at $13 if the shares are called away – I’m practically at breakeven…and who knows, if these shares start to rise I may be able to roll them up.

Here’s the analysis:


January and August 2012, bought 700 shares at an average price of $14.70, total position basis $10,288.42.
If the shares are called at the $13 strike, I will get back $9,082.82 net of commissions, for a loss of $1,205.60.

Total options income:  $741.52

Total dividends collected:  $336.00

Net Profit:
1) Stock gains:  -$1,205.60
2) Options income:  $741.52
3) Dividend Income: $336.00

Total Net Profit after Assignment:  -$128.08
Absolute Return on Investment: Negatory
Annualized Return (360+ days):  Negatory

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