Today, new covered calls positions were established in three equities [Bank of America Corp. (BAC), iShares MSCI South Korea ETF (FXI), and Market Vectors Russia ETF (RSX)] with Aug2012 expirations. The positions and some possible results are as follows:
1. Bank of America Corp.
07/30/2012 Bought 1,000 BAC shares @ $7.29
08/01/2012 Sold 10 BAC Aug2012 $7.00 Call Options @ $.44
Note: the price of BAC was $7.34 today when these options were sold.
A possible overall performance result (including commissions) is as follows:
Stock Purchase Cost: $7,281.05
= ($7.29*1,000+$8.95 commission)
Net Profit:
(a) Options Income: +$423.55 = ($.44*1,000 shares) - $16.45 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If BAC assigned at $7.00 upon expiration): -$298.95
=+($7.00-$7.29)*1,000 - $8.95 commissions
Total Net Profit(If BAC assigned at $7.00 at Aug2012 expiration): +$124.60
= (+$423.55 +$0.00 -$298.95)
Absolute Return (If BAC assigned at $7.00 at Aug2012 expiration): +1.7%
= +$124.60/$7,281.05
Annualized Return (If stock assigned): +32.9%
= (+$124.60/$7,281.05)*(365/19 days)
2. iShares MSCI South Korea ETF
07/30/2012 Bought 500 EWY shares @ $54.51
08/01/2012 Sold 5 EWY Aug2012 $56.00 Call Options @ $1.40
Note: the price of EWY was $56.40 today when the options were sold.
Two possible overall performance results (including commissions) for this iShares MSCI South Korea ETF covered calls position is as follows:
Stock Purchase Cost: $27,263.95
= ($54.51*500+$8.95 commission)
Net Profit:
(a) Options Income: +$687.30
= 500*$1.40 - $12.70 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If EWY price unchanged at $54.51): -$8.95
= ($54.51-$54.51)*500 - $8.95 commissions
(c) Capital Appreciation (If EWY assigned at $56.00): +$736.05
= ($56.00-$54.51)*500 - $8.95 commissions
Total Net Profit(If EWY price unchanged at $54.51): +$678.35
= (+$687.30 +$0.00 -$8.95)
Total Net Profit(If EWY assigned at $56.00): +$1,423.35
= (+$687.30 +$0.00 +$736.05)
Absolute Return if Unchanged at $54.51: +2.5%
= +$678.35/$27,263.95
Annualized Return If Unchanged (ARIU): +47.8%
= (+$678.35/$27,263.95)*(365/19 days)
Absolute Return if Assigned at $56.00: +5.2%
= +$1,423.35/$27,263.95
Annualized Return If Assigned (ARIA): +100.3%
= (+$1,423.35/$27,263.95)*(365/19 days)
3. Market Vectors Russia ETF
07/30/2012 Bought 600 RSX shares @ $26.59
08/01/2012 Sold 6 RSX Aug2012 $27.00 Call Options @ $.55
Note: the price of RSX was $26.70 today when these options were sold.
Two possible overall performance results (including commissions) for this Market Vectors Russia ETF covered calls position is as follows:
Stock Purchase Cost: $15,962.95
= ($26.59*600+$8.95 commission)
Net Profit:
(a) Options Income: +$316.55
= 600*$.55 - $13.45 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If RSX price unchanged at $26.59): -$8.95
= ($26.59-$26.59)*600 - $8.95 commissions
(c) Capital Appreciation (If RSX assigned at $27.00): +$237.05
= ($27.00-$26.59)*600 - $8.95 commissions
Total Net Profit(If RSX price unchanged at $26.59): +$307.60
= (+$316.55 +$0.00 -$8.95)
Total Net Profit(If RSX assigned at $27.00): +$553.60
= (+$316.55 +$0.00 +$237.05)
Absolute Return if Unchanged at $26.59: +1.9%
= +$307.60/$15,962.95
Annualized Return If Unchanged (ARIU): +37.0%
= (+$307.60/$15,962.95)*(365/19 days)
Absolute Return if Assigned at $27.00: +3.5%
= +$553.60/$15,962.95
Annualized Return If Assigned (ARIA): +66.6%
= (+$553.60/$15,962.95)*(365/19 days)
