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.
Monday, June 16, 2014
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
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
income: -$140.51 (By unwinding, I exchanged the option premium
for additional stock gains in this trade)
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%