Friday, June 5, 2015

Another Wash Sale: GM for F

At the beginning of June, Rescue My IRA had 16 positions working.  The trading plan for this account sets a target range for the number of positions in the portfolio at 12 to 16, so we are right at the top of the range.  While we wait for contracts to mature and turn over, it’s time to have a closer look at the performance of some of these trades.

Last month I did a “wash trade” on COP – link here for details – selling a stock that looked to be a slow mover and replacing it for another in the same sector that look more promising, VLO in this case.  I reviewed Rescue My IRA’s portfolio this month with the same objective, and found that a wash trade of F for GM could make some sense.  In the end, that’s what I did – I sold 500 shares of F at a small loss and bought 200 shares of GM, creating a trade that pretty much makes up for the loss in about 30 days.  http://rescuemyira.blogspot.com/2015/05/a-wash-trade-vlo-for-cop.html

Meanwhile, here is the analysis of the two component trades of this wash sale, net of commissions and fees:


Bought 500 shares in March 2015, total basis $8,292.00 with an average share price of $16.58. I sold the shares for a loss at $15.31.

Total options income:   $185.47 – I stated with the $17 strikes, but had rolled out to August and down to $16, setting this stock up as a wash sale candidate.   

Total dividends collected:  $75.00

Net Profit:
Total Net Profit after Unwinding:  -$383.72
Absolute Return on Investment: (-$383.72/$8,292.00) = -4.63%
Annualized Return not calculated.


Bought 200 shares in June 2015, total basis $7,275.00, with an average share price of $36.38.

Total options income:   $100.50, I sold July $37 strikes.    

Total dividends collected (June ex-dividend):  $72.00

Net Profit:
Total Net Profit if held through contract:  $279.50
Absolute Return on Investment: ($279.50/$7,275.00) = 3.84%
Annualized Return (45 days):  3.84%*(365/45) = 31.16%

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