Saturday, December 7, 2013

Unwinding CMI

Last winter, when I decided that I would focus strictly on S&P four- or five-star stocks in my trading plan, one of my first trades was with CMI.  My most recent contract was a December $125, and early last week the delta finally pegged at 1.0, so I unwound it rather than waiting for the shares to be called away. 

A highlight of this trade is the absolute gain percentage – it is above 12% for a position I held for 300 days.  
Readers know that my goal is 12% annualized; here is a trade that did better than my goal for it. 

And, hopefully, CMI is the first of between three and five positions that I will exit during December, all for share gains.

Here is the record on the position, net of fees and commissions:


The 100 share position had a basis price of $119.56, total position basis $11,956.00
Sold on unwind at $133.43 share, net $13,342.76
Total stock gain:  $1,386.76

Total options income:   -$167.56


Total dividends collected:  $225.00

Net Profit:
Total Net Profit after Unwinding:  $1,444.20
Absolute Return on Investment: ($1,444.20/$13,342.76) = 12.08%
Annualized Return (300 days):  12.08%*(365/300) = 14.70%

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