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
Total:  $1,594.58
Absolute return 14.14%
Annualized return (390 days) 13.24%

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