Three New Positions: ABT, CRUS, and PFE

Last Friday I added a couple of new positions in CRUS and PFE.  After the JPM early call I had a lot of cash on the sidelines; I’ve decided that I should not have more than 33% of the account value sitting out of the market – that is part of what it is going to take for me to make the returns I expect in the Rescue My IRA account.

These positions will provide examples of new strategies I’m putting to use in the account this year.  For one thing, I have relaxed the criteria of S&P four- or five-star ratings; I will choose from three-star stocks that are part of the S&P 500 but I expect to limit the amount of capital invested in three-star positions to less than 20% of my total holdings.  Also, to increase turnover in the account with the intent to generate additional covered call premiums, I am using weeklies for some trades.

While I am building up experience and confidence with the new strategies, I’m taking smaller positions to get comfortable with the analysis and procedure.  I only put together a 200 share position in CRUS as a result, laying out just over $4,000 for the trade.

I missed posting on ABT, a new position established in late December.  So I will make up for that in today’s post as well.

Here’s the analysis, or position plan for each of the three stocks – all values are net of commissions and fee: 

ABT

Transactions

Bought 300 shares at average share price $37.03 (total $11,110.00)
Sold 3 $38 Jan 2014 for a net of $184.24

Net Profit:

1) Options Income:  = $184.24
2) Dividend Income: Ex-date is January, dividend is $0.22 ($66.00)
3) Capital Appreciation if assigned at $38.00:  $272.89

Total Net Profit if Assigned and dividend collected:  $523.13
Absolute Return on Investment: ($523.13/$11,110.00) = 4.71%
Annualized Return if Assigned (20 days):  4.71%*(365/20) = 85.93%

CRUS

Transactions

Bought 200 shares at average share price $20.09 (total $4,017.00)
Sold 2 $20 Jan wk 3 for a net of $110.48

Net Profit:

1) Options Income:  = $110.48
2) Dividend Income: (rule breaker – no dividend) $0.00
3) Capital Appreciation if assigned at $20:  -$34.11

Total Net Profit if Assigned and dividend collected:  $76.37
Absolute Return on Investment: ($76.37/$4,017.00) = 1.90%
Annualized Return if Assigned (15 days):  1.90%*(365/15) = 46.26%

PFE

Transactions

Bought 300 shares at average share price $30.85 (total $9,256.00)
Sold 3 $31 Feb wk 1 for a net of $133.24

Net Profit:

1) Options Income:  = $133,24
2) Dividend Income (February ex-date): $76.00
3) Capital Appreciation if assigned at $31:  $26.89

Total Net Profit if Assigned and dividend collected:  $238.13
Absolute Return on Investment: ($238.13/$9,256.00) = 2.57%
Annualized Return if Assigned (30 days):  2.57%*(365/30) = 31.30%