At the start of the
month, I had six positions with May contracts, and with the market bumping
along at all time highs, it seemed possible that all six covered calls might be
assigned on expiration day. As it turns
out, my CSCO and TLT positions gradually looked less likely based on their
deltas, which I use as a surrogate for covered call probability of assignment, so I rolled
them out.
Here’s the analysis of
the two positions:
CSCO
The CSCO position
consists of 500 shares. My basis is $19.06
per share, and the stock is trading between $20 and $21. After rolling up in January and February, I
have been selling $21.00 strikes and rolling them monthly; this transaction
rolled out May options to July.
Total option
premiums: $287.59
Total dividend payments
(including the forecast July ex-dividend):
$252.00
Total stock gain at $21: $950.71
Total, absolute gain
on the position: $1,490.30
Total, absolute return
percentage ($1,490.30/$9,532.18): 19.62%
Annualized total
return percentage (held approx 300 days):
23.88%
TLT
As I mentioned when I
first established this 100 share position, TLT is my first ETF in the Rescue My
Account. My basis is $12,329.00 and I am
selling $124 strikes. This transaction
rolled out the May contract to June.
It is a US Treasuries
fund and appears to be negatively coordinated to the stock market as a whole. At the moment it is doing a little below my
goal of 12% annualized return, but between a monthly dividend payment and
rolling out monthly contracts until it is assigned, I think that performance
will track my goals pretty closely.
Total option premiums: $128.49
Total dividend
payments (monthly dividends!): $51.00
Total stock gain at $124.00: 53.89
Total, absolute gain
on the position: $233.38
Total, absolute return
percentage ($233.38/$12,329.00): 1.89%
Annualized total
return percentage (held 60 days): 11.52%
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