New Position: GE

I opened a second new position last week after the BA unwind, this time picking GE.  I do seem to get in cycles with some of the stocks I pick – maybe in some future post I will write about some of the multiple rounds in stocks like this one and IP. 

With an ex-dividend date coming up and the stock trading close to the next higher strike I decided to go for a week 4 covered call – my normal approach is to trade in the next calendar month or the one beyond, especially when there is a dividend play during that time period.

In any case, here’s the analysis, or position plan, if you will – all values are net of commissions and fee: 

GE

Transactions

Bought 400 shares for $9,531.00, or $23.83 per share

Sold 4 GE wk 4 Sep 2013 $24.00 for a net of $47.99

Net Profit:

1) Options Income:  = $47.99
2) Dividend Income: October ex-date, $76.00
3) Capital Appreciation if assigned at $24.00:  $51.89

Total Net Profit if Assigned and dividend collected:  $175.88
Absolute Return on Investment: ($175.88/$9,531.00) = 1.85%
Annualized Return if Assigned (14 days):  1.85%*(365/14) = 48.11%