Tuesday, March 24, 2015

Called Away on DOW

This is the second of two posts about the CRUS and DOW positions, which were both called away last Saturday on expiration of their March covered calls.  As with CRUS -the topic of yesterday's post here, the DOW trade proved to be a good one for Rescue My IRA, generating an absolute return of 3.38% over the 45-day holding period, for an annualized return of 27.39%.  Rescue My IRA sets up these trades with the goal of generating a 12% annualized return, so between the 18% for CRUS and 27% for DOW, the account is on a streak!

In any case, let’s move ahead for a look at the final analysis of the DOW trade, net of commissions and fees:


Bought 200 shares in January 2015, for a total basis of $9,047.00 and an average share price of $45.24.  The position was called away at expiration on a $45.00 strike price, netting $8.982.00, for a small capital loss of $65.00.

Total options income:   $370.48 – there was only one covered call contract written for the duration of this trade.

Total dividends collected:  $00.00 – these shares were called away before the ex-dividend date.

Net Profit:
Total Net Profit after Unwinding:  $305.48
Absolute Return on Investment: ($305.48/$9,047.00) = 3.38%
Annualized Return (45 days):  3.38%*(365/45) = 27.39%

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