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Monday, March 23, 2015

Continuing Positions -- Alcoa Inc., Micron Technology Inc., Yamana Gold Inc., and YRC Worldwide Inc.

Covered call positions were established in the Covered Calls Advisor portfolio for four companies (Alcoa Inc., Micron Technology Inc., Yamana Gold Inc., and YRC Worldwide Inc.).  In each instance, the Mar2015 options expired worthless last Friday when the stock prices closed below the strike prices.  Today, for all four positions, covered calls positions were established by selling Call options for the Apr2015 options expiration against the existing long stock positions. The transactions to-date for these positions and the respective potential return-on-investment results are detailed below:

1.  Alcoa Inc.  (Ticker AA) --Continuation
The transactions are as follows:
02/23/2015  Sold 3 AA Mar2015 $15.00 100% cash-secured Put options @ $.33
Note: The price of AA was $15.47 when this transaction was executed.

03/20/2015 3 AA Mar2015 Put options assigned and 300 shares of AA purchased at $15.00 strike price
Note: the price of Alcoa was $12.97 upon Mar2015 options expiration.
03/23/2015 Sold 3 Apr2015 $13.00 Call options @ $.53
Note: AA stock was $13.02 when these options were sold.

A possible overall performance result (including commissions) for this Alcoa position would be as follows:
100% Cash-Secured Cost Basis: $4,500.00
= $15.00*300

Net Profit:
(a) Options Income: +$235.60
= ($.33+$.53)*300 shares - 2*$11.20 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If Alcoa closes above $13.00 at the Apr2015 options expiration): -$600.00
= ($13.00 - $15.00)*300 shares

Total Net Profit (If Alcoa is above $13.00 strike price upon Apr2015 options expiration): -$364.40 
= (+$235.60 +$0.00 -$600.00)

Absolute Return (If Alcoa is above $13.00 at Apr2015 options expiration): -8.1%
= -$364.40/$4,500.00
Annualized Return: -55.8%
= (-$364.40/$4,500.00)*(365/53 days)



2.  Micron Technology Inc. (MU) -- ContinuationThe transactions are as follows:
02/19/2015 Sold 4 Micron Technology Inc. Mar2015 $30.00 Puts @ $.53
Note: The price of Micron was $31.88 when this transaction was executed.

03/20/2015 4 MU Mar2015 Put options assigned and 300 shares of MU purchased at $30.00 strike price
Note: the price of Micron was $28.68 upon Mar2015 options expiration.
03/23/2015 Sold 4 MU Apr2015 $30.00 Call options @ $.54
Note: MU stock was $28.68 when these options were sold.

A possible overall performance result (including commissions) for these Micron Technology transactions would be as follows:
100% Cash-Secured Cost Basis: $12,000.00
= $30.00*400

Net Profit:
(a) Options Income: +$404.10
= ($.53+$.54)*400 shares - 2*$11.95 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If MU closes above $30.00 at Apr2015 expiration): -$8.95
= ($30.00 - $30.00) * 400 shares - $8.95 commission

Total Net Profit (If MU is above $30.00 strike price at Apr2015 options expiration): +$395.15 
= (+$404.10 +$0.00 -$8.95)

Absolute Return (If MU closes above $30.00 at Apr2015 options expiration): +3.3%
= +$395.15/$12,000.00
Annualized Return (If MU is above $30.00 at expiration): +21.1%
= (+$395.15/$12,000.00)*(365/57 days)


3.  Yamana Gold Inc. (AUY) -- Continuation
The transactions are as follows:
02/17/2015 Sold 10 Yamana Gold Mar2015 $4.00 Puts @ $.28
Note: The price of AUY was $3.99 when this transaction was executed.
03/20/2015 10 AUY Mar2015 Put options expired
Note: the price of Yamana Gold was $3.91 upon Mar2015 options expiration.
03/23/2015 Sold 10 Apr2015 $4.00 Call options @ $.21
Note: AUY stock was $4.01 when these options were sold.

A possible overall performance result (including commissions) for these transactions would be as follows:
100% Cash-Secured Cost Basis: $4,000.00
= $4.00*1,000
Note:  the price of AUY was $4.00 when these Put options were sold.

Net Profit:
(a) Options Income: +$457.10
= ($.28 + $.21)*1,000 shares - 2*$16.45 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If AUY is above $4.00 strike price at Apr2015 expiration): +$0.00
= ($4.00 - $4.00)*1,000 shares

Total Net Profit (If AUY is above $4.00 strike price at Apr2015 options expiration): +$457.10
= (+457.10 +$0.00 +$0.00)

Absolute Return: +11.4%
= +$457.10/$4,000.00
Annualized Return (If AUY closes above $4.00 at expiration): +70.7%
= (+$457.10/$4,000.00)*(365/59 days)


4.  YRC Worldwide Inc. (YRCW) -- Continuation
The transactions are as follows:
02/23/2015  Sold 4 YRCW Mar2015 $20.00 100% cash-secured Put options @ $1.30
Note: The price of YRCW was $19.67 when this transaction was executed.

03/20/2015 4 YRCW Mar2015 Put options expired
Note: the price of YRC Worldwide was $18.98 upon Mar2015 options expiration.
03/23/2015 Sold 4 YRCW Apr2015 $20.00 Call options @ $.50
Note: YRCW stock was $19.00 when these options were sold.


Two possible overall performance results (including commissions) would be as follows:
100% Cash-Secured Cost Basis: $8,000.00
= $20.00*400

Net Profit:
(a) Options Income: +$696.10
= ($1.30 + $.50)*400 shares - 2*$11.95 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If YRCW stock price is unchanged at $19.00 at Apr2015 expiration): -$400.00
= ($19.00 - $20.00)*400 shares; OR
(c) Capital Appreciation (If YRCW is above $20.00 strike price at Apr2015 expiration): +$0.00
= ($20.00-$20.00)*400 shares

1. Total Net Profit (If YRCW is unchanged at $19.67 at Apr2015 options expiration): +$606.80
= (+$738.80 +$0.00 -$132.00); OR
2. Total Net Profit (If YRCW is above $20.00 strike price at Apr2015 options expiration): +$738.80
= (+$738.80 +$0.00 +$0.00)

1. Absolute Return (If YRCW is unchanged at $19.00 at Apr2015 options expiration): +7.6%
= +$606.80/$8,000.00
Annualized Return: +52.2%
= (+$606.80/$18,000.00)*(365/53 days); or
2. Absolute Return (If YRCW is above $20.00 strike price at Apr2015 options expiration): +9.2%
= +$738.80/$8,000.00
Annualized Return: +63.6%
= (+$738.80/$8,000.00)*(365/53 days)