Unwinding CSCO and SPLS – and Dumping TLT

Last month I learned about unwinding positions as a close out transaction if there’s been a run that exceeds the contract’s strike price.  I saw that opportunity for my CSCO shares this week, where I was waiting to have the shares called away later this month, and on SPLS, where I had a September contract.  There was a healthy gain overall on CSCO, but even with the share gain on SPLS I ended up in a more or less breakeven spot.

I took advantage of these two trades to bury my losses on TLT, which was my first attempt at including ETFs in the portfolio.  TLT is a bond fund, and the recent action in the markets have punished bond prices…and I don’t see that being corrected through the end of the year.  I decided to pull the trigger since I could cover the loss with the other gains.

Here’s the analysis of the three positions:

CSCO

Position basis:  500 Shares, basis $9.532.18, or $19.06 per share; the stock went ex-dividend on July 1, and I will collect that dividend. The position doubled my performance goals of 12% annualized.

Option Premiums:  -$1,412.18 (I had rolled up CSCO a few times in the past)

Dividends Collected:  $252.00

Stock Gain:  $2,825.60

Total:  $1,665.42

Absolute return 21.93%

Annualized return (300 days) 26.68%

SPLS

I still remember the day I bought my SPLS shares in Fort Worth last year.  I thought that a five-star rated retail stock would be good diversification in my portfolio.  Basically I ended up with dead money for 17 months!

Position basis:  700 Shares, basis $10,288.42, or $14.70 per share.

Option Premiums:  -$1,156.05

Dividends Collected:  $420.00

Stock Gain:  $975.36

Total:  $101.31

Absolute return 1.27%

Annualized return (510 days) 0.91%

TLT

When I bought TLT, my first attempt to use ETFs for covered calls, I thought I was making a good decision to diversify with some bond holdings in addition to basic stocks.  I did not anticipate what would happen to the prices of the underlying assets if and when interest rates started going back up.  Essentially, the resulting losses were my motivation for unloading the shares as soon as I could, which I did after taking advantage of the CSCO trade above.

Position basis:  100 Shares, basis $12,329.00, or $123.29 per share.

Option Premiums:  $144.22

Dividends Collected:  $78.57 (includes the July ex-dividend date)

Stock Gain:  -$1,357.10

Total:  $1,134.31

Absolute return:  Negative, not calculated!

Annualized return (150 days): Also not calculated