Monday, March 23, 2015

Called Away on CRUS - 18%+ Annualized Return!

At expiration last Saturday, I had two positions called away for a profit:  CRUS and DOW.  Normally, I would make a combined post on these transactions, but I am short of time this morning and will only write about the CRUS trade – I’ll update on DOW tomorrow morning.

CRUS was a little bit of a flyer when I selected it last year – it has consistently been rated as 3 stars by S&P, where I typically work with 4 stars stocks, and it pays no dividend, which is a second key criteria within Rescue My IRA.  Other than that, solely by selling covered calls I was able to generate a very respectable yield of more than 18% for the holding period (absolute return), and better than 18% annualized, which exceeds my goal of a 12% annualized return, and then some.

Here is the final analysis of the CRUS trade, net of commissions and fees:


Bought 400 shares in February 2014, for a total basis was $8,038.00 with an average share price of $20.10.
The position was called away on a $20 strike price in March 2015, netting $7,982.00, for a total stock gain of -$56.00.

Total options income:   $1,576.28 – I sold $20 covered calls on a monthly basis through most of the holding period, with one transaction at the $18.50 strike.

Total dividends collected:  $00.00 – CRUS does not pay dividends.

Net Profit:
Total Net Profit after call:  $1,520.28
Absolute Return on Investment: ($1,520.28/$8,038.00) = 18.91%
Annualized Return (375 days):  18.91%*(365/375) = 18.41%

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