Last week I adjusted
my AAPL position – there was some volatility when one of the competitors
announced a new product, so I rolled the position out and up when the shares
took a one-day hit. That is the second
roll-up I have done since acquiring these shares in June, I’ve written covered
calls on the 100-share position at strikes of $95, $97.50, and now $100.00.
If the shares are
called away early on their October ex-dividend date or at November expiration,
I will have held them either 150 days or 180 days and generated an absolute
return of more than 10% - I can live with that.
Here’s the position
plan for AAPL, net of fees and commissions, and assuming I collect dividends
through the holding period:
AAPL
This is a 100-share
position with a basis of $9,380.99, or $93.81 per share. The current covered call is $100 Nov 2014 but
I started in May 2014 with a $95 strike.
Total covered call
premiums: $269.94
Total dividend
payments (assumes I collect November): $94.00
Total stock gain at $100: $601.01
Total, absolute gain
on the position: $964.95
Total, absolute return
percentage ($964.95/$9,380.99): 10.29%
Annualized total
return percentage (approx 180 days if held to expiration): 20.86%
Sensitivity analysis
shows that if the shares are called early on the October ex-dividend date, the
absolute gain percentage drops to 9.79%, but the annualized gain goes up to
23.81%, due to the shorter holding period.
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