Sunday, April 21, 2013
ITW: Closed out at Last
The ITW position is unusual because of how it ended up rolling out. I established it as a 200 share purchase in March 2012 – I think I might have made that first trade from a hotel room in Fort Worth, in fact. The share basis was $56.37, so I started out with $57.50 strikes.
Eventually I made the move to $60 strikes, and during December, half of the shares were called away on the ex-dividend date. I’ve held the remaining shares since then, and they were finally called away from me on the April expiration last Friday.
I held these long enough to collect a full year’s worth of dividends, a good amount of call premiums, and a handsome gain on the shares – a hat trick. But calculating an annualized return is quirky because of the way the shares were called. I calculate the return against the total original basis – on ITW it works out to an annualized 13.24%, which is slightly above my goal of 12%.
If I were to adjust that for the assignment and reduced basis for the last five months I held the shares, I’d probably come out with 14 or 15%. That’s not bad, so I’m happy in any case.
Here’s the analysis of the ITW position:
osition basis: 200 Shares, basis $11,274.00, or $56.37 per share; Apr 60 assigned.
Option Premiums: $606.86
Dividends Collected: $296.00
Stock Gain: $691.72
Absolute return 14.14%
Annualized return (390 days) 13.24%