Wednesday, October 23, 2013

A Second New Position: WFC

The second position I opened this week is WFC.  In the past I have stayed away from banks, insurance, REITs, and other financial oriented companies, but over the last year or so I decided to incorporate a few of them into the portfolio, as long as they met my selection criteria.  The WFC position has a November covered call written against it, and there is the potential for a dividend payment in the strategy as well.

Here are the details of the WFC trade:



10/21/2013 Bought 300 shares at average share price $42.78 (total $12,835.00)
10/21/2013 Sold 3 WFC Nov 2013 $43.00 for a net of $130.24

Net Profit:

1) Options Income:  = $130.24
2) Dividend Income: Ex-date in November, dividend is $0.30 ($90.00)
3) Capital Appreciation if assigned at $43.00:  $47.89

Total Net Profit if Assigned and dividend collected:  $268.13
Absolute Return on Investment: ($268.13/$12,835.00) = 2.09%
Annualized Return if Assigned (30 days):  2.09%*(365/30) = 25.42%

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