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, April 8, 2014
Unwinding CAT - after 600 Days Held!
I have three
transactions I need to post – on Monday I rolled out PFE and FB, and today I unwound
CAT. Since CAT is probably the longest
held position in the history of Rescue My IRA, just about 600 days held, I
think I will go ahead and post on this transaction first. I’ll post PFE and FB
before the end of the week.
Since there was a
$2.00 per share bump in the price today, I decided I would go ahead and unwind
the position and take the money off the table.
I didn’t hold through the ex-dividend date I forecast for later this
month, and I bought to close the $95 May covered call – so my final numbers are
a little bit lower than the plan I wrote in February. Still, the absolute return was over 14
percent, and the annualized calculation works out to almost nine percent –
below the goal of 12% annualized, but still a gain, so it’s a win.
I’m going to find a
position or two to put these proceeds right back to work.
Here is the final
analysis of the CAT trade, net of commissions and fees:
Bought 100 shares in
August 2012 at an average price of $87.24, total position basis $8,723.99
Sold on unwind 100
shares at $10,303.27.
Total stock gain: $1,579.28
income: -$643.17 (By unwinding, I exchanged the option premium
for additional stock gains in this trade)
Total Net Profit after Unwinding: $1,272.11
Absolute Return on Investment: ($1,272.11/$8,723.99) = 14.58%
Annualized Return (600!!!! days): 14.58%*(365/600) = 8.87%