Wednesday, October 16, 2013

Adding Shares and Rolling Out F

It has been very busy in the Rescue My IRA account this month – I’m behind on my posts here so I will begin catching up today.  The posts coming up will include executing a couple of unwind transactions and making a couple of position adjustments as I have attempted to trim my sails to navigate the turbulent sideways market during the ongoing “shutdown” crisis in Washington.  

Nevertheless, this account notched a new high book value of over $150K for a few days, and has settled in this morning at above $149K.

Today’s post will be about adding shares to the F position, and I will work on getting the other two or three posts up before options expiration on Friday.  At the moment, I only have one October contract left on SPY – that one could end up being called or not, all depending on Congress’s actions in the next couple of days.

I opened the F position last month with 200 shares – I had a trade in this stock a few months ago and did well with it, and since I had a little money left on the sidelines, I put it back to work at a share basis of $17.49, selling a November 18 contract.  I added 300 shares yesterday, dropping my share basis to $17.23, and rolled everything out to a December 18 contract.  The trade puts me in position for a triple play, since the ex-dividend date is coming up later this month, and I will have collected call premiums and a forecast share gain by the time the trade ends.

Here’s the analysis: 

Total option premiums:  $204.70
Total dividend payments (including the forecast October ex-dividend):  $50.00
Total stock gain at $18:  $366.89
Total, absolute gain on the position:  $621.59
Total, absolute return percentage ($621.59/$8,616.00):  7.21%

Annualized total return percentage (held approx 90 days): 29.26%

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