Diversion

Thursday, June 6, 2013

June Roll-outs: COP and DVN

The market is moving sideways here in the early part of June, so I took a look at the covered calls I had written on the COP and DVN positions.  The deltas on those June contracts had declined, so it was looking unlikely that they would be called away at expiration – plus, the option premium on the current contracts had fallen into my roll-out zone, trading in the mid 20 cents range.  So I rolled them out. 

In the case of DVN, where I sold a September contract, I locked in the shares for the ex-dividend date next month, and I am likely in line for the September dividend as well, unless the shares are called away early then.  For COP, a May ex-date had already passed, so August is the next scheduled dividend, and I have an August contract.  We’ll see how these shares go.

In the meantime, here’s the analysis of the two positions.

COP

The COP position consists of 200 shares.  My basis is $64.18 per share, and the stock is trading below there.  I am selling $65 strikes, this transaction rolled out June options to August. 

Total option premiums:  $187.48
Total dividend payments (including the forecast August ex-dividend):  $264.00
Total stock gain at $65:  $147.89
Total, absolute gain on the position:  $599.37
Total, absolute return percentage ($599.37/$12,835.00):  4.67%
Annualized total return percentage (held approx 90 days):  18.94%

DVN

This is a 200 share position I established last month.  My current share basis is $60.07, and I am selling $60 strikes – I rolled out June contracts to September in this transaction.

Total option premiums:  $683.48
Total dividend payments (counting September ex-dates):  $88.00
Total stock gain at $60:  -$31.91
Total, absolute gain on the position:  $739.57
Total, absolute return percentage ($739.57/$12,014.80):  6.16%

Annualized total return percentage (held 120 days):  18.72%

No comments:

Post a Comment