Like many of my generational colleagues, the baby boomers, I've found that my best intentions about saving for retirement aren't always meeting the mark. In 2011, I took some old 401(k) accounts and combined them into a self-directed IRA with Scottrade, and established a strategy of using covered calls to stabilize and enhance my returns. Rescue My IRA chronicles the progress of my IRA rescue using this approach.
Tuesday, January 21, 2014
Called Away for the Hat Trick: INTC
Even though there was some downward pressure
on the stock, INTC finished in the money by more than a buck on Friday, and my
shares were called away at the January expiration. This is the first time in a while I’ve had
shares called – I usually can manage to unwind the position a couple of weeks
early, and I get the proceeds moved into a new position ASAP, but that didn’t
work out for me with my January $24.00 on INTC this time.
I had the shares for 90 days and collected covered call premiums,
dividends, and stock gains on this one, making it a hat trick. And the final returns pegged out at 4.92%
absolute, and 19.95% annualized – exceeding my goal of 12%. I can’t complain.
Here is the record on this position, as usual,
net of fees and commissions:
Bought 400 shares at
an average price of $23.68, total position basis $9,471.00
Shares called away on assignment
at $9,582.89, average share price $23.96.
Total options income
(I rolled the $24.00 strike out three times): $263.92
1) Stock gains: $111.89
3) Dividend Income: $90.00
Total Net Profit after
Absolute Return on Investment: ($465.81/$9,471.00) = 4.92%
Annualized Return (90 days): 4.92%*(365/90) = 19.95%