Thursday, January 24, 2013

Rolling out and up ITW

I have one final transaction to post on from my recent trades – this time, a roll-out and roll-up on 100 shares of ITW.  I'm thinking this will be the last transaction of the month - all that is left to do is watch and wait until the February expiration date, or watch for early calls on some of the contracts.

Regular readers may recall that ITW became something of a special situation in the Rescue My IRA portfolio in December, when 100 shares of the original 200 share position were called on the ex-dividend date at a strike price of $60.  The post on that one is here:  

Since the remaining 100 shares were not called in December, I rolled-out to a January option, and now have bumped up to a March $62.50, which I was able to do with a slight gain in premium.  My intention is to let these shares be called away if they are in the money in March. 

Here’s the analysis through the most recent trade:


The ITW position was established with 200 shares, and is currently 100 shares after a partial early assignment in December.  My basis on the shares is $56.37 per share, and the stock is currently trading near $64.  I have sold covered calls at strikes ranging from $57.50 to $62.50 during the course of this position.   

Total option premiums:  $475.37
Total dividend payments (estimated through the current contract):  $262.00
Total stock gain at $62.50:  $941.78 (includes the gain already recorded on 100 shares)
Total, absolute gain on the position:  $1,679.15
Total, absolute return percentage ($1,679.15/$11,274.00):  14.89%
Annualized total return percentage (held approx 390 days):  13.94%

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