Saturday, February 23, 2013
Some February Adjustments: DOW and AFL
It was a busy week in the Rescue My IRA account, so I have a couple of blog posts coming up in the next few days. Today I will write about two adjustments I recently made, to stocks DOW and AFL, and then early next week I will write about some new positions I established with the proceeds from the three call assignments I had during February 2013.
As a practice, I will consider a roll-out on any position where the call I have established reaches a value of 20 cents per share or less. Lately, I have had occasion, given the market’s action this year, to do roll-ups – closing out a lower strike and selling a higher strike, but in the two cases today the approach was more typical.
Here’s the analysis of the two positions.
The DOW position consists of 300 shares. My basis is $31.85 per share, and the stock is trading slightly below there. I am selling 33 strikes and rolling them monthly; this transaction rolled out March options to April.
Total option premiums: $656.18
Total dividend payments (including the forecast March ex-dividend): $352.00
Total stock gain at $33: $327.47
Total, absolute gain on the position: $1,335.65
Total, absolute return percentage ($1,335.65/$9,554.53): 13.98%
Annualized total return percentage (held approx 300 days): 17.01%
This is a 200 share position I established in January with a 100 share purchase. I added another 100 share lot last week, averaging my per share basis down while simultaneously rolling the position out a month. My current share basis is $51.62, and I am selling 55 strikes – the current contract is August 2013.
Total option premiums: $246.46
Total dividend payments (counting ex-dates through the contract term): $175.00
Total stock gain at $55: 658.89
Total, absolute gain on the position: $1,080.35
Total, absolute return percentage ($1,080.35/$10,324.00): 10.46%
Annualized total return percentage (held 210 days): 18.19%