New Position: SPY

Once the JPM position was called away on the ex-date, April 1, I put most of the proceeds into a new position with SPY, the S&P 500 ETF.  The per share cost of this trade is fairly high – it’s the one security with highest share value I have ever bought in Rescue My IRA, although this is not my first rodeo with SPY. 

My approach this time was to look for a trade with only two weeks of time involved, and also to sell an in-the-money covered call to basically write a contract for a set gain.  In this case, I’ll have about $15.00 in a capital loss, but that is offset by a call premium of just over $160.00.  The net of about $145 over the course of the nine day holding period sets this trade up for an absolute return of .70%, which annualizes to 29%. 

This is the third trade in a series that started with a profitable DIS trade earlier this year, followed by the JPM trade that was called away.  I sure hope I can keep the string going!

Here is the position plans for the SPY position, with results reported net of commissions and fees:

SPY

Transactions

Bought 100 shares at average share price $205.97 (total $20,597.00)
Sold 1 $206 April 10 2015 covered call for $163.75

Net Profit:

1) Options Income:  = $163.75
2) Dividend Income (no dividends this holding period): $0.00
3) Capital Appreciation/Loss if assigned at $206.00:  -$15.00

Total Net Profit if assigned on April 10:  $148.75
Absolute Return on Investment: ($148.75/$20,597.00) = 0.72%
Annualized Return if Assigned and Dividend Collected (9 days):  0.72%*(365/9) = 29.29%