Called Away on the ex-date: JPM

I bought a couple hundred shares of JPM on the heels of my DIS trade last January.  It is a stock I've had a couple of good trades with over the course of the Rescue My IRA account, and this transaction adds to the track record.  

I held the shares a total of 75 days before they were called away on the April 1 ex-dividend date yesterday - and the trade earned an absolute return of 5.51% on the cash invested.  That works out to an annualized return of almost 27%, well above my goal of a 12% annualized return.

(For the original January post on this position, see this link.)

Meanwhile, here is the final analysis of the JPM trade, net of commissions and fees:

JPM

Shares:

Bought 200 shares in January 2015, with a total basis of $11,223.00 and an average share price of $56.12.

The position was called away on the ex-dividend date at a $57.50 strike price, netting $11,482.77, for a total stock gain of $259.77.

Options:

Total options income:   $358.49 – I only sold one covered call on this trade, the April $57.50.

Dividend:

Total dividends collected:  $00.00 – the stock was called on the April ex-dividend date.

Net Profit:
Total Net Profit after Unwinding:  $618.26
Absolute Return on Investment: ($618.26/$11,223.00) = 5.51%
Annualized Return (75 days):  5.51%*(365/75) = 26.81%

Called Away Due to Merger: KRFT

On Tuesday afternoon the financial markets were informed of the intent to merge HNZ and KRFT.  As it happens, I opened a 100 share position on KRFT just last week on March 19 – when the merger news broke, those shares rose more than $20 in one day, and my $62.50 April 2015 was called away.

Although the position plan for KRFT was designed to be a hat trick, where I would collect a covered call premium, dividend, and share gain, in the end that stock run up meant my call would be assigned early, well before the ex-dividend date, so I only received the call premium and the share gain, for an absolute return of $146 or 2.37%.  

If you extrapolate the annualized return on this 7-day trade, it is 123.60%!  I’m thinking that will be the best trade of the year, but if it isn’t, it's still good for me. 

Meanwhile, here is the final analysis of the KRFT trade, net of commissions and fees:

KRFT

Shares:

Bought 100 shares on March 19, 2015, for a basis of $6,149.99, or $61.50 per share. 

The position was called away on a $62.50 strike price, netting $6,232.00, for a total stock gain of $83.01.

Options:

Total options income:   $62.75

Dividend:

Total dividends collected:  $00.00 – the call was exercised before the April ex-dividend date.

Net Profit:
Total Net Profit after Unwinding:  $145.76
Absolute Return on Investment: ($145.76/$6,149.99) = 2.37%
Annualized Return (7 days):  10.69%*(365/7) = 123.60%

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:

DOW

Shares:

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.

Options:

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

Dividend:

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%

Called Away on CRUS - 18%+ Annualized Return!

At expiration last Saturday, I had two positions called away for a profit:  CRUS and DOW.  Normally, I would make a combined post on these transactions, but I am short of time this morning and will only write about the CRUS trade – I’ll update on DOW tomorrow morning.

CRUS was a little bit of a flyer when I selected it last year – it has consistently been rated as 3 stars by S&P, where I typically work with 4 stars stocks, and it pays no dividend, which is a second key criteria within Rescue My IRA.  Other than that, solely by selling covered calls I was able to generate a very respectable yield of more than 18% for the holding period (absolute return), and better than 18% annualized, which exceeds my goal of a 12% annualized return, and then some.

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

CRUS

Shares:

Bought 400 shares in February 2014, for a total basis was $8,038.00 with an average share price of $20.10.

The position was called away on a $20 strike price in March 2015, netting $7,982.00, for a total stock gain of -$56.00.

Options:

Total options income:   $1,576.28 – I sold $20 covered calls on a monthly basis through most of the holding period, with one transaction at the $18.50 strike.

Dividend:

Total dividends collected:  $00.00 – CRUS does not pay dividends.

Net Profit:
Total Net Profit after call:  $1,520.28
Absolute Return on Investment: ($1,520.28/$8,038.00) = 18.91%
Annualized Return (375 days):  18.91%*(365/375) = 18.41%

Called Away for the Hat Trick: GM

Just checked into my Scottrade account this morning to have a look at the week ahead.  My GM position was headed for an ex-dividend date of 3/9, and was well in-the-money, so I’m faced with the good news – bad news proposition that a stock I really enjoyed owning has been called away.  I’ll get over it though…GM scored a hat trick for me since I bought it in November, earning returns on covered call premiums, dividends, and a stock gain.

The absolute return on GM was almost $1,000 on the $12,400 invested, or 10.69% over the 140 +/- days I held it.  Sure there are trades that will do better, but that’s probably as good as you could ask for in the stock market.  I’ve got to get to work to find a position or two to replace it with; I’ll post that trade as soon as it is set up.

Meanwhile, here is the final analysis of the GM trade, net of commissions and fees:

GM

Shares:

Bought 300 shares in November 2014, and added another 100 share lot in January.  The total basis was $12,397.99 with an average share price of $30.99.

The position was called away on a $32 strike price, netting $12,782.00, for a total stock gain of $384.01.

Options:

Total options income:   $520.95 – I stated with the $32 strikes in December and was rolling them out monthly.   

Dividend:

Total dividends collected:  $90.00

Net Profit:
Total Net Profit after Unwinding:  $994.96
Absolute Return on Investment: ($994.96/$12,397.99) = 10.69%
Annualized Return (142 days):  10.69%*(365/142) = 27.48%

Called on the ex-date for a Hat Trick: BA

Yesterday, my BA position went ex-dividend and was called away – the stock has had a good run in the new year so far and has traded in-the-money since January.  The call was not unexpected; in fact, since I scored a hat trick with it – earning income from covered call premiums, a dividend payment, and a stock gain – it is one of this year’s Rescue My IRA success stories.

Next steps for me are to put the proceeds back to work, so I’m getting busy with research now.  In the meantime, here’s the final analysis of the BA trade, net of commissions and fees:

BA

Shares:

Bought 100 shares in September 2014 at an average price of $129.37, total position basis $12,937.00.

Sold on unwind 100 shares at $13,500.00. 

Total stock gain:  $545.70

Options:

Total options income:   $141.21 (for the term of this trade, strike prices ranges from $130 to $135)

Dividend:

Total dividends collected:  $73.00

Net Profit:
Total Net Profit after Unwinding:  $759.91
Absolute Return on Investment: ($759.91/$12.937.00) = 5.87%
Annualized Return (140 days):  5.87%*(365/140) = 15.31%

Called Away for the Hat Trick - DIS

In the fall of last year, my thoughts began to turn to that nice annual dividend that DIS pays.  I opened a position in September, but it was very conservative and was quickly called away – the ex-dividend date for this stock is in December.  So I waited a few days until October and opened a new position in DIS, one that was just called away last Friday.

As a matter of fact, that first transaction of the year was a success in another way:  DIS earned me a hat trick, which means I collected covered call premiums, a dividend payment, and there was a capital gain on the sale.  In total, the position earned $381 over the course of 90 days.  That works out to a calculated return of 4.35%, or annualized return of 17.65%.

Here’s the analysis of the DIS position, net of fees and commissions; the position was called away at expiration last week. 

DIS

This was a 100 share position established at $87.59 per share in October 2014, total basis $8,758.99.  During the holding period I sold covered calls at strike prices ranging from $87.50 to $92.50, the final strike price was $90.00.

Total covered call premiums:  $42.72

Total dividend payments (there was a single, annual dividend):  $115.00

Total stock gain at $90:  $223.01

Total, absolute gain on the position:  $380.73

Total, absolute return percentage ($380.73/$8,758.99):  4.35%

Annualized total return percentage (held approx 90 days):  17.65%

Called Away on the Ex-date: WIN

Earlier this week, I had finally achieved what I regard as an optimal balance between investments in stock positions and cash reserves just now – about 20% of the Rescue My IRA account was held in cash, and there were 15 stock positions.  That arrangement changed yesterday when my WIN position was called early on the stock’s ex-dividend date.

I added this position in the spring with the goal of adding a high-dividend stock (at the time, the calculated dividend yield on WIN was over 12%) that I could sell covered calls against to add to the returns.  I bought 1,000 shares a few days before the March ex-dividend date, but 100 shares were called away at that time, leaving me with 900 shares.  I rolled these out to a $8 May expiration covered call, and then rolled them up and out to a $9 November contract.

As usually happens, I traded away the cash I’d earned on covered calls for the promise of downstream stock gains, but I also figured I would collect at least one more dividend check before the shares were called.  So, overall, the position would meet my objective of a 12% return.

With the shares all called away at $9 yesterday, I have the capital back almost 150 days early, and although I won’t get those fat dividend checks, I did earn a nice return of nearly 7% on this trade during a 105 day holding period.  That works out to better than 24% annualized – it might just turn out to be one of my best trades so far this year based on that metric!

I guess I will get to work early next week on finding a new position to replace WIN. In the meantime, here is the final analysis of the WIN trade, net of commissions and fees:

WIN

Shares:

Bought 1,000 shares in at an average price of $8.12, total position basis $8,117.00

Early calls on 100 shares and then 900 shares, sold for a net of $8,874.00. 

Total stock gain:  $757.00

Options:

Total options income:   -$392.01 (When I rolled the stock up from an $8 to $9 covered call, I traded some of the option premium for additional stock gains in this trade)

Dividend:

Total dividends collected:  $175.00 – I collected one payment on 9 lots of the stock

Net Profit:
Total Net Profit after early call:  $539.99
Absolute Return on Investment: ($539.99/$8,117.00) = 6.65%
Annualized Return (105 days):  6.65%*(365/105) = 23.13%

Called Away on FB

Last month, I adjusted the FB position that I established in December, rolling up to a $60 strike.  The shares have continued to climb since then, reaching nearly $70 last week as February contract expirations approach.  I had a profitable position as it stood with the $60 strikes, and while I looked for opportunities to roll-up and roll-out, I didn’t find anything to pull the trigger on, and finally allowed the shares to be assigned. 

As I wrote in the last post about FB, this is my second go ‘round with the stock.  I made a great return the first time, and as the analysis below shows, I did well with it this second time.  I’m definitely going to watch for an opportunity to get in again, probably on the next dip below $65, if there is one.  If I didn’t do anything but sell a back-month covered call, I could meet my goal of a 12% annualized return with this stock! 

Here’s the analysis of the most recent FB position.

FB

This is a 200 share position established between November and December 2013 with two 100 share purchases.  The per share basis is $54.94, for a total of $10,988.49.  Past trades had rolled the covered call strike price up to $60. 

There’s an earlier post about adding the second lot of 100 shares while rolling up here: 

http://rescuemyira.blogspot.com/2013/12/fb-add-on-and-roll-up.html

Total option premiums:  $274.93

Total dividend payments (no dividends on FB):  $0.00

Total stock gain at $60:  $994.40

Total, absolute gain on the position:  $1,269.33

Total, absolute return percentage ($1,269.33/$10,988.49):  11.55%

Annualized total return percentage (held 120 days):  35.14%

Called Away for the Hat Trick: INTC

Even though there was some downward pressure on the stock, INTC finished in the money by more than a buck on Friday, and my shares were called away at the January expiration.  This is the first time in a while I’ve had shares called – I usually can manage to unwind the position a couple of weeks early, and I get the proceeds moved into a new position ASAP, but that didn’t work out for me with my January $24.00 on INTC this time.

No matter.  I had the shares for 90 days and collected covered call premiums, dividends, and stock gains on this one, making it a hat trick.  And the final returns pegged out at 4.92% absolute, and 19.95% annualized – exceeding my goal of 12%.  I can’t complain.

Here is the record on this position, as usual, net of fees and commissions:

INTC

Shares:

Bought 400 shares at an average price of $23.68, total position basis $9,471.00

Shares called away on assignment at $9,582.89, average share price $23.96.

Total stock gain:  $111.89

Options:

Total options income (I rolled the $24.00 strike out three times):  $263.92

Dividend:

Total dividends collected:  $90.00

Net Profit:
1) Stock gains:  $111.89

2) Options income:  $263.92

3) Dividend Income: $90.00

Total Net Profit after Assignment:  $465.81
Absolute Return on Investment: ($465.81/$9,471.00) = 4.92%
Annualized Return (90 days):  4.92%*(365/90) = 19.95%

Called Away on TXT

I opened the TXT position last month, after unwinding my GE position.  The positioning opening post is here:  http://rescuemyira.blogspot.com/2013/06/new-positions-txt-and-win.html

It’s unusual for the Rescue My IRA account to have a position that works out with so little management effort.  I don’t take any credit for my good fortune on this one, it’s just that the market is taking care of us right now.  How long it holds we just can’t say.

Here’s the analysis.

TXT

Transactions

6/13/2013 Bought 300 shares at average share price $27.08 (total $8,131.00)
6/13/2013 Sold then rolled out 3 TXT June 2013 $27.00 for a net of $318.62

Net Profit:

1) Options Income:  = $318.62
2) Dividend Income: Ex-date was June 12, dividend is $0.02 ($6.00)
3) Capital Appreciation if assigned at $27.00:  -$48.11

Total Net Profit if Assigned and dividend collected:  $276.51
Absolute Return on Investment: ($276.51/$8,131.00) = 3.40%
Annualized Return if Assigned (50 days):  3.40%*(365/50) = 24.83%

Called Away on HAL, LNC, and SWK

When I checked on the deltas for my February expiring contracts last week, it looked likely that my positions in SWK, LNC, and HAL would be called away, while the CSCO position was less likely.  As the month played out, that is more or less what happened – I took advantage of a down market Thursday and closed the CSCO Feb 21, rolling out to an Apr 21, at a profit of just over $200.  Meanwhile the other positions were called away.

All three of the assigned positions ended up as hat tricks – meaning I collected call premiums, dividends, and stock gains from them.  On HAL, I didn’t quite earn the annualized return of 12% that I have set as a goal, but I did much better than that on the LNC position after only holding it for about 60 days, and then SWK also delivered.  Now I will begin the process of investing the proceeds from these three – about $27K in capital ready to go back to market.

In the case of HAL, the stock continues to have a 3-star rating from S&P – I have decided to upgrade my portfolio to include only 4- and 5-star stocks.  During February I culled two of those positions between HAL and WAG, there aren’t many left but I will continue to work on this going forward.

Here’s the analysis of the three positions:

HAL

Position basis:  300 Shares, basis $10,299.90, or $34.33 per share; Feb 35 assigned.

Option Premiums:  $643.08

Dividends Collected:  $81.00

Stock Gain:  $182.92

Total:  $907.00

Absolute return 8.81%

Annualized return (300 days) 10.71%

LNC

Position basis:  400 Shares, basis $10,346.80, or $25.87per share; Feb 26 assigned.

Option Premiums:  $398.93

Dividends Collected:  $48.00

Stock Gain:  $36.09

Total:  $483.02

Absolute return 6.23%

Annualized return (60 days) 37.90%

SWK

Position basis:  100 Shares, basis $7,291.50, $or $72.92 per share; Feb 75 assigned.

Option Premiums:  $679.20

Dividends Collected:  $139.00

Stock Gain:  $191.32

Total:  $1,009.52

Absolute return 13.85%

Annualized return (300 days) 16.84%

WAG: Taking Some Money Off the Table

Last year during the intensive travel schedule I had, I distinctly remember the day in Dallas when I established the 300 share position on WAG.  It seemed a lucrative opportunity, and now, just a bit longer than a year since then, it turns out it was.  While the stock price had its ups and downs, from managing this position in particular I learned quite a bit about this covered call adventure I’ve embarked upon.

The shares were called away yesterday on the ex-dividend date; I earned a 15.65% absolute yield on the stock.  In my final transaction, I bought to close a July 40 call and sold to open a February 38; doing this on the ex-dividend date ensured that the transaction would happen.  Also, that puts WAG into the hat trick category, having secured income on all three accounts – call premiums, dividends, and stock gains.

That exceeds my goal of earning a 12% return on these investments, so I’m satisfied with the results.  Also, since the shares are one of the S&P 3 star stocks I still have in the portfolio, I needed to divest them to better align my program with my trading plan.

A last note – WAG is one of a few positions that I rolled up to chase a higher strike price.  As I’ve come to understand this process, this is where one trades option premiums for stock gains.  It worked in this case, but I need more data to evaluate the strategy.  I have a couple more of those positions, and should be able to draw some conclusions soon.

Here’s the analysis:

WAG

Shares:

February – March 2012:  Bought 300 shares at an average price of $33.74, total position basis $10,121.80

2/13/2013 Sold on assignment 300 shares at $11,382.82, average share price $37.94

Total stock gain:  $1,261.02

Options:

Total options premiums:  $45.62 (as I mentioned above, I chased the stock gain here, exchanging options premiums for a good return on the stock price)

Dividend:

During the year plus I held the position, I collected a total of $277.50 in dividends

Net Profit:
1) Stock gains:  $1,261.02

2) Options income:  $45.62

3) Dividend Income: $277.50

Total Net Profit after Assignment:  $1,261.02 + $45.62 + $277.50 = $1,584.14
Absolute Return on Investment: ($1,584.14/$10,121.80) = 15.65%
Annualized Return: not calculated, the average holding period for the two lots was almost exactly one year, so we’ll call it 15.65%

Called Away Early and a Roll-out: ITW

After the ugly experience with my HPQ position earlier in the month - and the relief at having it called away, even at a loss - I have been watching the other two positions that had ex-dividend dates this month and that I’d set up with December expiries:  ITW and SWK.  The SWK position has a $72.50 strike, and the stock is near-the-money – having floated up into and out of in-the-money status over the course of the last two months.  In the case of ITW, as I was preparing my monthly forecast, the stock was in-the-money already, given the $60.00 strike I’d set for that contract.

I expected the ITW shares to be called last Friday when they went ex-dividend, and sure enough I had the email from Scottrade on Friday morning – except that only 100 shares of the 200 share position had been called away.  

The share price was adjusted and then dropped some more after the dividend calculation, so I decided to close out the remaining December option and roll the remaining 100 shares out to January.  Even though I will now pay a commission on the second transaction, I was able to add about $50 net to the total return on this position, in addition to the $38 in dividends I stand to collect for one lot of the shares.

In the analysis that follows, the calculations for the position assume being called away in January – and I have exceeded my goal of a 12 percent annualized return, using the full original basis.  If the position isn’t called away, of course I will have an adjustment post up very soon.  

Until then, here is the analysis:

ITW

Shares:

March 2012 Bought 200 shares at an average price of $56.37, total position basis $11,274.00

12/14/2012 Sold on assignment 100 shares at $5,982.89, average share price $59.83 – the calculations below assume that I will have a similar transaction next month.

Total stock gain:  $691.78

Options:

Total options income:  $411.86

Dividend:

Total dividends collected:  $262.00

Net Profit:
1) Stock gains:  $691.78

2) Options income:  $411.86

3) Dividend Income: $262.00

Total Net Profit after Assignment:  $1,365.64
Absolute Return on Investment: ($1,365.64/$11,274.00) = 12.11%
Annualized Return (330 days):  12.11%*(365/330) = 13.40%