Monday, June 16, 2014

Unwinding SBUX

Coming on the heels of yesterday’s post, about two underperformers in the Rescue My IRA portfolio, today I am writing about unwinding SBUX with good results after only 38 days.

I drink a lot of coffee, and I’m at SBUX every work day, plus that is the brand we drink at home. So I figured, Warren Buffet says buy what you know – and when the stock received a 4-star rating from S&P, it made it to my list of potentials. 

I set the position up in May with a June contract, collected a dividend, and unwound it last Thursday, a week before the contract expired.

Here is the final analysis of the SBUX trade, net of commissions and fees:


Bought 100 shares in May 2014 at an average price of $70.68, total position basis $7,068.00
Sold on unwind 100 shares at $7,462.84 
Total stock gain:  $394.84

Total options income:   -$140.51 (By unwinding, I exchanged the option premium for additional stock gains in this trade)

Total dividends collected:  $28.00

Net Profit:
Total Net Profit after Unwinding:  $282.33
Absolute Return on Investment: ($282.33/$7,462.00) = 3.99%
Annualized Return (38 days):  3.99%*(365/38) = 38.37%

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