An initial position in GNK was established on March 30, 2009. This position was actually found using a free option analyzer that I found earlier in the week which shows you the covered call stock/option combinations with the highest possible return. Using this I looked for a stock in an industry area which I did not currently have in my portfolio and that I believed would not add a lot of risk. The first stock on the list which met this criteria was Genco Shipping which is company which mostly charters its boats to charterers who transport dry goods. All stocks in this space have been battered in the recession, and Genco was not immune as it has dropped 86% from its peak. It was decided to establish a position and sell an at-the-money call, as the stock market has increased substantially since its bottom on March 9, it was my assumption that by options expiration on April 17, there was a possibility for the market to start moving downward or stagnate.
3/30/2009 -- Bought 100 GNK @ 12.635
3/30/2009 -- Sold To Open 1 GNK April $12.50 Call @ 1.36
The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $1263.50
Downside Coverage: 10.76%
Possible Max Upside: 10.47%
Annualized Max Upside: 125.6%
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