The position in Johnson Controls was closed on April 3, 2009. This was done as a result of the substantial increase in the share price, almost 50% from its original purchase. Since the original call was sold at the money at the time, the upside was unfortunately quite limited. However, due to the fact that the option was now extremely in the money, time value had essentially disappeared leaving the stock-call value at almost the strike price. As such a limit covered call order (which buys the option and sells the stock at the same time) was set for 9.93, which was 7 cents below the strike price. This trade was executed, and the resulting performance is noted below.
3/18/2009 -- Bought 100 JCI @ 10.1049
3/18/2009 -- Sold To Open 1 JCI April $10 Call @ 0.9
4/3/2009 -- Bought to Close 1 JCI April $10 Call @ 5.29
4/3/2009 -- Sold 100 JCI @ 15.17
The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $1010.49
Original Downside Coverage: 8.9%
Resulting Upside: 7.33%
Annualized Upside: 167.31% (Annualized Upside Is Calculated Using The Number Of Days The Position Is Held)
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