After the DIS position
was called away, I decided to move quickly back into a new position, and chose
JPM as the basis for it. I’ve held JPM
and done well with my covered call strategy on the stock, and sure enough that
looks to be the case this time as well. I sold April covered calls with a
$57.50 strike price, and the timing is such that I have the possibility of a
hat trick, with income coming from stock gains, dividends, and covered call
premiums.
Here is the position
plan for JPM, with results estimated net of commissions and fees:
JPM
Transactions
Bought 200 shares at average share
price $56.12 (total $11,223.00)
Sold 2 $57.50 Apr 2015 covered calls
Sold 2 $57.50 Apr 2015 covered calls
Net Profit:
1) Options Income: = $358.49
2) Dividend Income (April ex-dividend): $80.00
3) Capital Appreciation if assigned at $57.50: $259.00
1) Options Income: = $358.49
2) Dividend Income (April ex-dividend): $80.00
3) Capital Appreciation if assigned at $57.50: $259.00
Total Net Profit if assigned on the ex-dividend date: $697.49
Absolute Return on Investment: ($697.49/$11,223.00) = 6.21%
Annualized Return if Assigned and Dividend Collected (90 days): 6.21%*(365/90) = 25.20%
You've inspired me. I'm going long Starbucks on good earnings and low Oil. I'm looking at buying the July $80 calls for $6.25, and selling the March 90 calls for 1.00. Since $625 is my max risk, I'm going to wait as long as I need for the March 90 call to fill at $1.00, and I will have my synthetic covered call.
ReplyDeleteI'll let you know how it turned out...
Nathan