Saturday, February 22, 2014

Called Away on FB

Last month, I adjusted the FB position that I established in December, rolling up to a $60 strike.  The shares have continued to climb since then, reaching nearly $70 last week as February contract expirations approach.  I had a profitable position as it stood with the $60 strikes, and while I looked for opportunities to roll-up and roll-out, I didn’t find anything to pull the trigger on, and finally allowed the shares to be assigned. 

As I wrote in the last post about FB, this is my second go ‘round with the stock.  I made a great return the first time, and as the analysis below shows, I did well with it this second time.  I’m definitely going to watch for an opportunity to get in again, probably on the next dip below $65, if there is one.  If I didn’t do anything but sell a back-month covered call, I could meet my goal of a 12% annualized return with this stock! 

Here’s the analysis of the most recent FB position.


This is a 200 share position established between November and December 2013 with two 100 share purchases.  The per share basis is $54.94, for a total of $10,988.49.  Past trades had rolled the covered call strike price up to $60. 

There’s an earlier post about adding the second lot of 100 shares while rolling up here: 

Total option premiums:  $274.93
Total dividend payments (no dividends on FB):  $0.00
Total stock gain at $60:  $994.40
Total, absolute gain on the position:  $1,269.33
Total, absolute return percentage ($1,269.33/$10,988.49):  11.55%

Annualized total return percentage (held 120 days):  35.14%

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