Saturday, August 10, 2013

Unwinding COP

Just as I did with the WIN position last week, I unwound the COP position in Rescue My IRA last Thursday.  I held it for about 100 days and the position did not quite meet my goal of a 12% annualized return – it earned 10.60% annualized to be exact, so it was close.  In the past I have found this stock unpredictable in the market and when I made the investment it was one of these “hold your nose” situations we’re all hearing about lately.

The stock immediately began to decline below my basis after I bought it, and I chased it down with my covered call strategy by closing out higher strikes for lower ones.  It began to come back, so I had to roll-up, giving up call premiums in the meantime. 

I wasn’t prudent or patient this time.  I’ll keep that in mind when I’m choosing stocks in the future.

Here is the record on this position, net of fees and commissions:


Bought 200 shares at an average price of $64.18, total position basis $12,835.00
Sold on unwind 200 shares at $13,442.76, average share price $67.21
Total stock gain:  $607.76

Total options income:  -$505.07
(As I’ve mentioned in posts about unwinding positions, the higher sell price is the result of buying to close option premiums, which can turn this revenue source negative over the course of the position)

Total dividends collected:  $270.00
(I chose this position with a few days before ex-date, so I was able to collect two dividend payments during the holding period...the dividend is one of the attractive aspects of this stock.)

Net Profit:
1) Stock gains:  $607.76
2) Options income:  -$505.07
3) Dividend Income: $270.00
Total Net Profit after Assignment:  $372.69

Absolute Return on Investment: ($372.69/$12,835.00) = 2.90%
Annualized Return (100 days):  2.90%*(365/100) = 10.60%

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