Thursday, January 23, 2014

Adding on to CRUS

Frequent readers will remember that I have made an exception on my usual criterion of only using S&P 4- or 5-star stocks:  I am currently holding FB and CRUS, both 3-star stocks.  My goal with these two positions is to learn about managing volatility and risk.

On CRUS, I originally took a flyer on a 200-share position – low committed capital – and an S&P 3-star stock with no dividend, where I would normally limit my selections to 4- or 5-star stocks that pay from two to five percent annually.  The day before yesterday, after I established the new GLW position, I decided to add 200-shares and sell the January week 4 $20 on them – so I now have a four-lot position with this stock.

Here’s the analysis of the position, net of fees and commissions - if I took the time to break this down into the two 200 share lots, the return would be pretty exceptional due to the duration of the trades; however, to keep this brief I will report performance as an average of the two lots: 


The position now consists of 400 shares, with a total basis of $8,038.00, or $20.10 per share. 
I originally sold January 2014 week 3 $20 strikes, but have rolled that out to week 4.  The position is currently in-the-money.

Total covered call premiums:  $441.95
Total dividend payments (no dividend on CRUS):  $0.00
Total stock gain at $20:  -$55.11
Total, absolute gain on the position:  $386.84
Total, absolute return percentage ($386.84/$8,038.00):  4.81%

Annualized total return percentage (held approx 22 days):  79.85%

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