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, July 21, 2014
Last week I unwound
the 200-share Rescue My IRA position in T after collecting the July dividend
and prior to its August expiration date - for background, I treat dividends as
collected if I hold the shares on the ex-dividend date. I had purchased the
shares in June and sold an August $35 covered call against them, but with the
Delta on that contract moving past 1.0 last week I took advantage of the
opportunity for an early close out of the trade.
Here’s the final
analysis of the T trade, net of commissions and fees:
Bought 200 shares in June
2014 at an average price of $35.09, total position basis $7,018.98.
Sold on unwind 200
shares at $7,294.95, total stock gain: $275.87
income: -$223.01 (By unwinding, I exchanged the option premium
for additional stock gains in this trade)
Total Net Profit after Unwinding: $144.86
Absolute Return on Investment: ($144.86/$7,018.98) = 2.06%
Annualized Return (35 days): 2.06%*(365/35) = 21.52%