Unwinding BA

Last week my September contract on BA reached the point where unwinding it made sense, so I took quick action and closed the position.  To me, the goal of an unwinding transaction is to capture the profit in the stock price, which will often mean trading off some covered call premiums, as it did in this case – but the goal also has to be to get the money back to work quickly.  As it turns out, I was able to use these proceeds and a little additional cash to put two new positions into play, and I will post about them later in the week.

I held the BA position for 80 days, and the position exceeded my goal of a 12% annualized return by earning more than 24% annualized during this period.  That’s pretty good – I wish I could count on that every time.

In any case, here is the final record on this position, net of fees and commissions:

BA

Shares:

Bought 100 shares at for $10,317.00, or $103.17 per share. 

Sold on unwind 100 shares at $10,957.80, average share price $109.58.

Total stock gain:  $623.69

Options:

Total options income:  -$113.02

(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)

Dividend:

Total dividends collected:  $48.50

to

Net Profit:
1) Stock gains:  $623.69

2) Options income:  -$113.02

3) Dividend Income: $48.50

Total Net Profit after Assignment:  $559.17
Absolute Return on Investment: ($559.17/$10,317.00) = 5.42%
Annualized Return (80 days):  5.42%*(365/80) = 24.73%