Unwinding CMI and QCOM

Looks like the last time I put up a post mid-month was back in October.  There is finally some good news in 2016, though, with the market officially making up the ground it had lost this year.  And for Rescue My IRA, that also means I had some contracts that were ready to be called away at a profit!

But I did not wait until expiration on these shares (CMI and QCOM) – instead I unwound the trades a few days early.  I reinvested the proceeds into HST and T last week, and will post about the new positions tomorrow. 

My philosophy regarding unwinding trades before expiration is somewhat nuanced – if I can accelerate a planned gain by a week or so, I will, as long as I can immediately find a next position for those proceeds to go towards.  The opportunity to do this at a minimum cost usually doesn’t happen until the final week before expiration, and I am typically able to exit with a cost of about $10 from the net gain.  That is worth it as long as the quick turnaround is executed, creating a trade with a 2% gross return.

Meanwhile, here is the final analysis of the CMI and QCOM trades, net of commissions and fees:

CMI

Shares:

Bought 100 shares in November 2015.  The total basis was $9,357.00, for an average share price of $93.57.

The covered call strike price ranged from $93.50 to $95.00 during the holding period, but I sold the shares for $10,244.77, netting $102.48 per share and a total gain of $1,065.77.

Options:

Total options income:   -$488.25; as I mentioned I rolled the strike price up during the course of the holding, but I traded the premiums for the stock gain when I unwound the position.

Dividend:

Total dividends collected:  $97.50.

Net Profit:
Total Net Profit after Unwinding:  $675.02
Absolute Return on Investment: $675.02/$9,357.00) = 7.21%
Annualized Return (105 days):  7.21%*(365/105) = 25.08%

QCOM

Shares:

Bought 100 shares in December 2015.  The total basis was $4,935.99, for an average share price of $49.36.

I sold the shares for $5,222.89, netting $52,23 per share and a total gain of $286.90.

Options:

Total options income:   -$20.25; this was an unusually stable position, so I never rolled out the March contract after setting it up in December.

Dividend:

Total dividends collected:  $48.00.

Net Profit:
Total Net Profit after Unwinding:  $314.65
Absolute Return on Investment: $314.65/$9,357.00) = 6.37%
Annualized Return (75 days):  6.37%*(365/75) = 31.02%