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, September 15, 2014
Called Away Early: PSA
Last week the
combination of in-the-money and ex-dividend occurred on my PSA shares, and so
the shares were called away. I’ve held
these shares for more than a year, and while the position did not meet my 12%
annualized returns goal, it was profitable and it beat a savings account. The position also earned income all three
ways, stock gains, dividends, and covered call premiums.
Here at Rescue My IRA,
we call that a Hat Trick.
So – winning!
Between unwinding FB
and JPM, and this assignment, the account is flush with cash. Need to put it back to work!
Meanwhile, here is the
final analysis of the PSA trade, net of commissions and fees:
Bought 100 shares in July
2013 at an average price of $163.59, total position basis $16,359.00.
Called away on
ex-dividend date, 100 shares at $16,982.00.
Total options income: $174.20
Total Net Profit after assignment: $1,342.20
Absolute Return on Investment: ($1,342.20/$16,982.00) = 8.20%
Annualized Return (420 days): 14.58%*(365/420) = 7.13%