Wednesday, April 2, 2014

Two Trades: Rolling out CRUS and Unwinding GLW

As April began, there were three contracts expiring that I needed to plan for:  CRUS, GLW, and PFE.  I rolled out CRUS earlier in the week, and today I unwound GLW.  That leaves me with PFE facing April expiration, and the option ($31 strike) is in the money, so I will let the shares ride until there is no time value left and I can unwind – the transaction is not optimized yet, as it was with GLW today.

In February I last wrote about my GLW position, which was comprised of 600 shares, bought in two lots:

At the $18 strike, I stood to take a small capital loss, but I could collect the dividend and a nice call premium.  Today I was watching the stock closely and saw an opportunity to make an unwind trade that took back some of the capital loss, improving my overall return by a small amount.  I pulled the trigger, and doing so upped the absolute return from 3.19% to 3.36%, almost a full quarter of a point – it doesn’t always work this way, in fact it usually results in a reduction of a few decimals.

In any case, here are the results of the two trades – the CRUS roll-out and the GLW unwind.  As always, results are net of commissions and fees. 

This is a 400-share position with a basis of $8,038.00, or $20.10 per share.  I have been selling $20 strikes and rolling them monthly.

Total covered call premiums:  $868.40
Total dividend payments (no dividend):  $0.00
Total stock gain at $20:  -$56.00
Total, absolute gain on the position:  $812.40
Total, absolute return percentage ($812.40/$8,038.00):  10.11%

Annualized total return percentage (held approx 135 days):  27.33%


As noted in the linked post above, this was a 600 share position bought in two lots, with an average price per share of $18.04 and total position basis $10,823.00
Sold on unwind 600 shares at $12,712.71. 
Total stock gain:  $1,889.71

Total options income:   -$1,585.69 (By unwinding, I exchanged the option premium for additional stock gains in this trade)

Total dividends collected:  $60.00

Net Profit:
Total Net Profit after Unwinding:  $364.02
Absolute Return on Investment: ($364.02/$10,823.00) = 3.36%
Annualized Return (62 days):  3.36%*(365/62) = 19.80%

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