Conventional Account Trades - FB and SO

I have a small conventional trading account at Scottrade – I have been using more or less the same trading philosophy with it as I do in Rescue My IRA, which is why I post about it here sometimes.  My goals with the conventional account are the same as with the IRA: to achieve a 12% annual rate of return, and to compound that return until the funds are needed.

I just added a little bit of cash from my year-end bonus to the account, and since I had 100% of the cash sitting on the sidelines, I decided to pick up two positions – FB and SO – which I am also trading in Rescue My IRA.

Here’s the position plan for both – all values are net of commissions and fee: 

FB

Transactions

Bought 100 shares at average share price $57.01 (total $5,701.00)
Sold 1 FB Jan 2014 $57.50 for a net of $163.74

Net Profit:

1) Options Income:  = $163.74
2) Dividend Income: No dividends on this stock
3) Capital Appreciation if assigned at $57.50:  $31.89

Total Net Profit if Assigned and dividend collected:  $195.63
Absolute Return on Investment: ($195.63/$5,701.00) = 3.43%
Annualized Return if Assigned (25 days):  3.43%*(365/25) = 50.10%

SO

Transactions

Bought 100 shares at average share price $40.82 (total $4,082.00)
Sold 1 SO Feb 2014 $41.00 for a net of $59.74

Net Profit:

1) Options Income:  = $59.74
2) Dividend Income: Ex-date is Feb 1, dividend is $0.5075 ($50.75)
3) Capital Appreciation if assigned at $41.00:  $0.89

Total Net Profit if Assigned and dividend collected:  $111.38
Absolute Return on Investment: ($111.38/$4,082.00) = 2.73%
Annualized Return if Assigned (50 days):  2.73%*(365/50) = 19.92%

Meanwhile, In My Conventional Account

While this blog is primarily meant to cover my trades in the Rescue My IRA account at Scottrade, I have begun to use the covered call approach on a small conventional account that I have with the brokerage.  I generally use the same investing approach, trading plan – and even stock selection screeners for that purpose.

I recently closed a trade on MSFT in that account, and just established another on F – details of the trades are below.  I need to get with my tax guy now, to make sure that I have all the records I’ll need to do my schedule D.

I structured the F trade around an ex-dividend date of May 1, selling what was a near the money covered call, which has subsequently gone in the money.  However, F has earnings today – so there could be a change in strategy soon enough.

Details below:

MSFT

Position basis:  200 Shares, basis $5,583.00, or $27.92 per share; Apr 28 assigned.

Option Premiums:  $181.48

Dividends Collected:  $46.00

Stock Gain:  -$0.11 (a loss of eleven cents!)

Total:  $227.37

Absolute return 4.07%

Annualized return (90 days) 16.52

F

Position basis:  500 Shares, basis $6,472.00, or $12.94 per share; May 13 calls sold

Option Premiums:  $141.74

Dividends Collected:  $0.00 (ex-date May 1, stock is in the money and I expect early assignment – otherwise I will collect $50.000)

Stock Gain:  $10.89

Total:  $152.63

Absolute return 2.36% (if the stock is not assigned May 1, this estimated return goes up to >3%)

Annualized return (20 days) 43.04%