New Positions: HST and T

After unwinding the CMI and QCOM positions, I quickly rolled most of the proceeds into two new positions with HST and T.  Both are ex-dividend plays – their ex-dividend date is between when I set the trades up and the covered call expiration date, with the theory being that the stocks could be called away early. 

In the case of an early call, it will mean that I lose the dividend, but since I can get the money working again pretty quickly, the gain from the new position offsets the lost dividend.

Here are the position plans for HST and T, net of commissions and fees. 

HST

Transactions

Bought 300 shares at average share price $16.81 (total $5,044.00)
Sold 3 $17 APR covered calls. 

Net Profit:

1) Options Income:  = $113.00
2) Dividend Income (ex-date is 3/29): $60.00

3) Capital Appreciation if assigned at $17.00:  $38.00

Total Net Profit if assigned on the contract expiration date:  $211.00
Absolute Return on Investment: ($211.00/$5,044.00) = 4.18%
Annualized Return if Assigned and Dividend Collected (30 days): 4.18%*(365/30) = 50.90%

If called away on the ex-dividend date, the absolute return drops by $60.00, but it is still 2.99% for a 15-day holding period.

T

Transactions

Bought 200 shares at average share price $38.31 (total $7,661.00)
Sold 2 $38.50 APR 8 covered calls. 

Net Profit:

1) Options Income:  = $69.00
2) Dividend Income (ex-date is April 6): $96.00

3) Capital Appreciation if assigned at $38.50:  $21.00

Total Net Profit if assigned on the contract expiration date:  $186.00
Absolute Return on Investment: ($186.00/$7,661.00.00) = 2.43%
Annualized Return if Assigned and Dividend Collected (21 days): 2.43%*(365/21) = 42.20%

If called away on the ex-dividend date, the absolute return drops by $96.00, but it is still 1.17% for the 21-day holding period.