Diversion

Wednesday, December 26, 2012

New Position: AFL...and Adding to LNC


I have been working on finding a couple of new positions, and today I added a second financial to the portfolio with stock AFL.  It didn’t use all of the investable capital I had on hand, so I added one lot of LNC, the other stock I added this month – that makes four lots, all with 26 Jan 2013 covered calls written on them.  For the AFL, I sold a 55 Feb 2013; in both cases, the stocks have ex-dividend dates between now and the options expiration date and I may see early calls.

Here’s the analysis.


AFL

The AFL position I established today consists of 100 shares.  My basis is around $5,399.00, or $53.99 per share.  I sold the 55 Feb strike on the single lot.    

Total option premiums:  $123.74
Total dividend payments (including the forecast Feb ex-dividend):  $35.00
Total stock gain at $55:  $83.89
Total, absolute gain on the position:  $242.63
Total, absolute return percentage ($242.63$5,399.00):  4.49%
Annualized total return percentage (held approx 60 days):  27.34%

LNC

I also added 100 shares to my LNC position today, which had been 300 shares.  The new basis is $10,346.80, or $25.87 per share.  I sold 26 Jan 2013 covered calls against all of the shares.

Total option premiums:  $258.96
Total dividend payments (including January ex-date):  $48.00
Total stock gain at $60.00:  $36.09
Total, absolute gain on the position:  $343.05
Total, absolute return percentage $343.05/$10,346.80):  4.42%
Annualized total return percentage (held 30 days):  53.83%

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