Wednesday, May 13, 2015

Unwinding FCX

When I picked FCX for a trade last month, I knew I was choosing a stock with a lot of volatility, as well as one that gets a lot of talk in various forums.  These facts define shares that I would normally not deal with in Rescue My IRA, but I did have the capital at the time and the potential profit on the trade seemed to offset the risks of a short-term position, so I bought 500 shares and sold covered calls against them.  I was able to unwind the position for a good profit in early May, after a six week holding period. 

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


Bought 500 shares in March 2015.  The total basis was $9,467.00 with an average share price of $18.93.
I unwound the position in early May at an average price of $23.84, for a total gain of $2,450.74

Total options income:   -$1,527.92 – as is often the case on unwind trades, I traded option premiums for stock gains.

Total dividends collected:  $25.00

Net Profit:
Total Net Profit after Unwinding:  $947.82
Absolute Return on Investment: ($947.82/$9,467.00) = 10.01%
Annualized Return (45 days):  10.01%*(365/40) = 81.21%

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