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.
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%
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%