Wednesday, January 23, 2013
Two More January Roll-outs: HAL and SWK
Last Friday was the monthly expiration date for options on the CBOE – I didn’t have any January calls that were subject to exercise, having rolled those positions out (and up in some cases), but I still have a couple of trades this month that I haven’t posted yet. So I’ll take care of that today, showing the analysis of HAL and SWK.
As a quick forecast of my monthly results, after 10 trades I am just about even on call premiums and dividends. The monthly net is a negative $47 or so, but with the roll-up adjustments I’ve taken during the rally here, I’ve adjusted my strike prices upward so that I have the potential to recognize $2,500 or so in stock gains.
That’s a fair trade, now to manage these positions to deliver those results.
Here’s the analysis on HAL and SWK:
The HAL position consists of 300 shares. My basis is $34.33 per share, and the stock is currently trading in the money above my $35 strike. I rolled the January contract to February in this trade; assuming it is still in the money next month I will allow it to be called away. It is close to meeting my goal of 12% annualized return, but not quite there.
Total option premiums: $643.08
Total dividend payments (through the current contract): $81.00
Total stock gain at $35: $182.92
Total, absolute gain on the position: $907.00
Total, absolute return percentage ($907.00/$10,299.90): 8.81%
Annualized total return percentage (held approx 310 days): 10.37%
This is a100 share position with a basis of $72.92; I’ve sold calls with a strike price of $72.50, which would have resulted in a small loss on the sale, but my current contract is at a $75 strike. I will allow this to be assigned assuming it is in the money at February expiration – the stock has returned nearly 14% since I bought it, so it met my goal.
Total option premiums: $679.20
Total dividend payments (through the current contract): $139.00
Total stock gain at $75.00: $191.32
Total, absolute gain on the position: $1,009.52
Total, absolute return percentage ($1,009.52/$7,291.50): 13.85%
Annualized total return percentage (held 300 days): 16.84%