Tuesday, September 29, 2009

Initial Transaction - Omnicare (OCR)

An additional position I opened at the end of September was in a company which I had in the CCIP back in April, and had exited in July. Omnicare is a is a geriatric pharmaceutical services company. The Company operates in two segments: Pharmacy Services and Contract Research Organization Services (CRO Services). The Company provides pharmaceuticals and related ancillary pharmacy services to long-term healthcare institutions. The uncertainty over the health care legislation in Congress as well as difficulty in executing its turnaround plan has caused the company to drop near its 52-week low of around $19. As I believe that regardless of the legislation passed it will bring the company a greater number of beds to be serviced, I thought now was a good time to get back in. However, I wanted to be somewhat cautious so I established an ITM call. The new profit/loss info is below:

9/29/2009 -- Bought 100 OCR @ 22.93
9/29/2009 -- Sold To Open 1 OCR November $22.50 Call @ 1.59


The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $2134.00

If stock is called at expiration:

Downside Coverage: 6.9%
Possible Max Upside: 5.44%

Annualized Max Upside: 37.44%

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