Tuesday, January 20, 2015
Called Away for the Hat Trick - DIS
In the fall of last year, my thoughts began to turn to that nice annual dividend that DIS pays. I opened a position in September, but it was very conservative and was quickly called away – the ex-dividend date for this stock is in December. So I waited a few days until October and opened a new position in DIS, one that was just called away last Friday.
As a matter of fact, that first transaction of the year was a success in another way: DIS earned me a hat trick, which means I collected covered call premiums, a dividend payment, and there was a capital gain on the sale. In total, the position earned $381 over the course of 90 days. That works out to a calculated return of 4.35%, or annualized return of 17.65%.
Here’s the analysis of the DIS position, net of fees and commissions; the position was called away at expiration last week.
This was a 100 share position established at $87.59 per share in October 2014, total basis $8,758.99. During the holding period I sold covered calls at strike prices ranging from $87.50 to $92.50, the final strike price was $90.00.
Total covered call premiums: $42.72
Total dividend payments (there was a single, annual dividend): $115.00
Total stock gain at $90: $223.01
Total, absolute gain on the position: $380.73
Total, absolute return percentage ($380.73/$8,758.99): 4.35%
Annualized total return percentage (held approx 90 days): 17.65%