Hat Tricks on MRK and UNH

This was a volatile week in the markets, understandable when you consider the bombing attacks in Boston on the negative side and improving hiring news on the positive side.  At one point, it looked as if some of my April contracts, which were well in the money at the beginning of the week, might end up not getting called away.  As it turned out, all three of the contracts in the Rescue My IRA account were assigned, and the one contract in my conventional account was also – today I will write about two of the contracts and my next post will cover the other two.

All of the assigned positions ended up as hat tricks – meaning I collected call premiums, dividends, and stock gains from them.  My goal is to earn a return of about 12% per year in the account, but the two positions I’ll cover in this post are noteworthy because I only held them for 60 days – and the estimated annualized return on them was 30% or better!  Now I will begin the process of investing the proceeds from these contracts, about $30K in the Rescue My IRA account.

Here’s the analysis of the two hat tricks:

UNH

Position basis:  200 Shares, basis $11,125.00, or $55.63 per share; Apr 57.5 assigned.

Option Premiums:  $196.49

Dividends Collected:  $42.50

Stock Gain:  $357.89

Total:  $596.88

Absolute return 5.37%

Annualized return (60 days) 32.64%

MRK

Position basis:  200 Shares, basis $8,521.00, or $42.61 per share; Apr 44 assigned.

Option Premiums:  $72.49

Dividends Collected:  $86.00

Stock Gain:  $261.89

Total:  $420.38

Absolute return 4.93%

Annualized return (60 days) 30.01%