Thursday, March 12, 2009

Update Transaction - General Electric (GE)

An additional position was established in General Electric on March 2, 2009. See previous GE purchase for rationalization. This covered call purchase was initially made based on the idea, that it was possible at the time for GE to go the way of Citi, and plummet to an unreasonable level. As such, the call was sold more than 35% in the money. However, as positive news began to emerge regarding GE, the call was rolled up to an earlier expiration and higher strike price.

3/2/2009 -- Bought 100 GE @ 8.0685
3/2/2009 -- Sold To Open 1 GE June $5 Call @ 3.60
3/12/2009 -- Bought To Close 1 GE June $5 Call @ 4.45
3/12/2009 -- Sold To Open 1 GE March $9 Call @ 0.53

The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $806.85


Downside Coverage: 44.62% -> None After New Call Sold
Possible Max Upside: 6.03% -> 7.02% (This is the upside after factoring in initial cost, sale price of original option, cost to buy back option, and sale price of more recent option)

Annualized Max Upside: 18.09% -> 84.24%

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