Monday, December 15, 2014
Two Roll-outs: EMC and GE
With the market headed south last week, there were several opportunities to roll out some of my positions. My strategy was to look primarily at December expirations, and EMC appeared as a candidate; looking a little further out, my GE position – recently rolled up and out – also was ripe for a roll out, so these two transactions are the topic of this post.
Here are the position plans for EMC and GE, net of fees and commissions, and assuming I collect dividends through the holding period:
This is a 400-share position established in September, with a basis of $11,745.99, or $29.36 per share. The current covered call is $30 Jan 2015; I started with the October $30 and have been rolling the contract monthly.
Total covered call premiums: $407.46
Total dividend payments (includes December ex-date): $92.00
Total stock gain at $30: $236.01
Total, absolute gain on the position: $735.47
Total, absolute return percentage ($735.47/$11,745.99): 6.26%
Annualized total return percentage (approx 135 days if held to expiration): 16.93%
I’ve held GE positions several times in Rescue My IRA since I started the account in October 2011. This go-round is a 400-share position, started in April 2014, with a basis of $10,348.98, or $25.87 per share. I have been selling covered calls ranging between $25 and $30 strike prices, but when compared to my goal of earning a 12% annualized return, this position hasn’t done so well – even though the total return is positive.
In light of this, I will continue to work on the position to see if I can improve it – but there is a strong likelihood I will accept the gains as they are on this $26 Feb 2015 position.
Total covered call premiums: $49.91
Total dividend payments (includes December ex-date): $220.00
Total stock gain at $26: $33.02
Total, absolute gain on the position: $302.93
Total, absolute return percentage ($302.93/$10,348.98): 3.83%
Annualized total return percentage (held approx 300 days): 4.66%