Saturday, March 23, 2013

Called Early for the Hat Trick on URS

Earlier this month I wrote about how 200 shares of my URS position had been called away on the ex-dividend date, March 13: I had held a position of 400 shares, and the stock was in the money by more than $5 – and it had remained there ever since.  For the second time during the course of the Rescue My IRA account I had a partial assignment, but that was rectified on Wednesday this week when the remaining 200 shares were called away.  So today’s post will be the close out entry for the URS position, which I held for about 300 days. 

I had purchased the URS shares as a replacement for my legacy holding, ACM.  I had worked at that company and one of the benefits was the ability to purchase shares within your 401(K) – after I was laid off there in 2011 and rolled the account over to Rescue My IRA, I still held 800 shares, which I wrote covered calls against.  For the record, ACM does not meet my stock purchase criteria and I wouldn’t have bought the shares in the first place if it hadn’t been for the extenuating “legacy” circumstance.  Eventually I decided to exit the position, taking the largest loss I ever have had in this account, around $5,000 – or about 25% of the position value.

Still desiring to hold a position in a major construction company, I chose URS, which did meet my selection criteria at the time, and I rolled the ACM proceeds over to a 400 share position.  As the analysis below shows, over the course of the 10 months or so that I held URS, I gained back $1,900 of that loss when the URS shares were called.  

In the end, because I was able to collect a gain on the share price, dividends, and covered call premiums, URS is another hat trick position.  I call that a win for the Rescue My IRA trading plan and a lesson well learned.

Here’s the analysis of the URS position.


5/7/2012 Bought 400 shares at $39.55, total position basis $15,827.00 (the largest position to date in this account)
3/2013 Sold on assignment 400 shares at a strike price of $40.00 in two transactions of 200 shares each
Total stock gain:  $138.64

Total options income (a total of seven contracts):  $1,477.91

Total dividends collected:  $280.00, including dividends on 200 shares from the March 2013 ex-dividend date

Net Profit:
1) Stock gains:  $138.64
2) Options income:  $1,477.91
3) Dividend Income: $280.00

Total Net Profit after Assignment:  $1,896.55
Absolute Return on Investment: ($1,896.55/$15,827.00) = 11.98%
Annualized Return (300 days):  11.98%*(365/300) = 14.58%

No comments:

Post a Comment