Friday, April 11, 2014
Rolling Out FB
This is the third time I have taken a position in FB in Rescue My IRA – I also had a 100 share position in my conventional trading account for a while. Both of the previous IRA positions and the conventional position were quite lucrative. I recognize that FB can be a volatile stock, but that membership and fan base offer so much potential for this company that I am willing to face the risks involved with this kind of stock.
This week’s market activity for FB is a fine example of the volatility that comes with this stock – it has had days where the stock price declined by a few dollars, and days where it rebounded and gained several dollars back. My current position is out of the money by 20%; however, the position plan shows that it has already generated an estimated 10% plus on the capital invested in just 105 days (assuming the June call is assigned).
I am content to hold the shares and continue using my covered call strategy until the stock is back in the $70 range, and perhaps beyond, all the way to $100 per share, if it goes there.
In the meantime, here’s the analysis of the current position, net of fees and commissions.
This is a 200-share position with a basis of $14,041.00, or $70.21 per share. The current position has a $72.50 strike price and I am rolling monthly.
Total covered call premiums: $1,055.35
Total dividend payments (no dividend): $0.00
Total stock gain at $72.50: $441.00
Total, absolute gain on the position: $1,496.35
Total, absolute return percentage ($1,496.35/$14,041.00): 10.66%
Annualized total return percentage (held approx 105 days): 37.05%