Diversion

Sunday, October 27, 2013

Adjustments to End the Month: CAT, INTC, and IP

Closing out the activities for the month in Rescue My IRA, I have three adjustments to post on.  As I have in the past, I will do the monthly update as of last Friday’s market close – I’ll put that post up tomorrow morning; then I have a couple of trades I did in the conventional account that will be the topic of a post early next week.

The adjustments in Rescue My IRA consisted of roll-outs of November contracts for CAT, INTC, and IP.  For CAT, since there is an ex-dividend date in either December or January (last year they moved it up for tax purposes), I rolled out to January, but for the other positions I just rolled a month into November.  This still leaves me with three contracts in November, which also should be a good month for dividends, but I’ll leave that for the next post.

In the meantime, here’s the analysis of the three adjusted positions.

CAT

This company reported earnings this week, and while it has been dragging along most of the year, the stock price took a significant hit. I took advantage of the dip to roll out and roll up the current contract from an $87.50 strike to a $90 strike.  If I am assigned on this contract the performance will average out to slightly below my goal of a 12% annualized return; this one is forecast at 11.38%, which is close, and I can live with that.

The CAR position is 100 shares, established at a basis of $87.17 in August 2012. 

Total option premiums:  $784.39
Total dividend payments (including the forecast ex-dividend for Dec/Jan):  $336.00
Total stock gain at $90:  $265.83
Total, absolute gain on the position:  $1,386.22
Total, absolute return percentage ($1,386.22/$8,716.99):  15.90%
Annualized total return percentage (held approx 510 days):  11.38%

INTC

This is a 400 share position I established earlier in October, basis is $9,471.00 or $23.68 per share. I rolled the $24 strike from November to December with this trade. The stock is close to the money, so it could be called away on the November 5 ex-dividend date.

Total option premiums:  $167.96
Total dividend payments (counting November ex-date):  $90.00
Total stock gain at $24:  $111.89
Total, absolute gain on the position:  $369.85
Total, absolute return percentage ($369.85/$9,471.00):  3.91%
Annualized total return percentage (held 60 days):  23.76%

IP

I opened the current IP position back in May, after discovering that S&P had promoted it to a 4-star rated stock – I’ve held past positions when it was 3-star stock and have done well with it.  This is a 200 share position I established with a basis of $9,585.00 or $47.93 per share. I have sold covered calls with a strike as high as $49 with this position, but the current strike is $47, and I have gone as low as $46. 

Total option premiums:  $753.37
Total dividend payments (counting November ex-date):  $180.00
Total stock loss at $47:  -$202.11
Total, absolute gain on the position:  $731.26
Total, absolute return percentage ($731.26/$9,585.00):  7.63%

Annualized total return percentage (held 180 days):  15.47%

No comments:

Post a Comment