This is a new position being established in Marathon Oil, an integrated oil/gas company which currently yields a bit higher than 3%. The profit/loss info is below:
11/30/2009 -- Bought 100 MRO @ 32.64
11/30/2009 -- Sold To Open 1 MRO December $33 Call @ 0.71
The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $3193.00
Commissions (Included In Cost): $5
Downside Coverage (from current price of $32.64): 2.2%
Possible Max Upside: 3.09%
Annualized Max Upside: 59.38%
Monday, November 30, 2009
Initial Transaction - Life Partners Holdings (LPHI)
Today I decided to open a cash-secured put position in the Life Partners Holdings (LPHI), a company which I have been investing in for quite a few months now. The profit/loss info is below:
11/30/2009 -- Sold To Open 1 LPHI January $17.25 Put @ 1.1324
The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Cost Basis: N/A
Potential Gain If Not Assigned At Expiration: 6.56%
Potential Annualized Gain If Not Assigned At Expiration: 50.98%
11/30/2009 -- Sold To Open 1 LPHI January $17.25 Put @ 1.1324
The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Cost Basis: N/A
Potential Gain If Not Assigned At Expiration: 6.56%
Potential Annualized Gain If Not Assigned At Expiration: 50.98%
Initial Transaction - iShares MSCI South Korea Index (EWY)
Today I decided to open a cash-secured put position in the iShares South Korea Index which tracks the South Korean stock market. The profit/loss info is below:
11/30/2009 -- Sold To Open 1 EWY December $43 Put @ 0.8824
The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Cost Basis: N/A
Potential Gain If Not Assigned At Expiration: 2.05%
Potential Annualized Gain If Not Assigned At Expiration: 39.42%
11/30/2009 -- Sold To Open 1 EWY December $43 Put @ 0.8824
The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Cost Basis: N/A
Potential Gain If Not Assigned At Expiration: 2.05%
Potential Annualized Gain If Not Assigned At Expiration: 39.42%
Wednesday, November 25, 2009
Update Transaction - Fluor (FLR)
Here is a good example of the difficulty of being human. This particular series of trades actually brought me to another important realization regarding the covered calls investing portfolio. I sold a call on the position on Nov. 23 which would have resulted in an extremely low return if called away, about 2% annualized. The next day the stock rose about 2.5% as a result of some comments made by Jim Cramer on his show. I took the emotional route, and bought back the call in the expectation that this rise would continue, but instead the stock began to fall, and I had simply lost $40 due to my actions. What I have come to realize as a result of this is regarding the reasoning behind selling calls which are either a few months out, or are very much out-of-the-money but very low premiums. The example would be the following:
Let's say you buy a stock at $40 and sell a $40 call for $1, which makes your cost basis $39. At expiration the stock is $35. A $40 call is $0.20, and a $37.50 call is $1. Now the normal response (at least for me), would be to sell the $40 call for $0.20. Except, an important thing to consider would be if you compare your options vs. establishing a new position if you were to simply exit the position, if you sell a $37.50 option, that would give you a 10% return. That kind of return is something that you would most likely not be able to find if you tried to create a new position.
The profit/loss info is below:
10/7/2009 -- Bought 100 FLR @ 47.07
10/7/2009 -- Sold To Open 1 FLR November $50 Call @ 1.70
11/20/2009 -- Call Expired
11/23/2009 -- Sold To Open 1 FLR December $45 Call @ 0.7
11/25/2009 -- Bought To Close 1 FLR December $45 Call @ 1.15
The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Cost Basis: $4582.00
Potential Gain: N/A
Potential Annualized Gain If Called At Expiration: N/A
Let's say you buy a stock at $40 and sell a $40 call for $1, which makes your cost basis $39. At expiration the stock is $35. A $40 call is $0.20, and a $37.50 call is $1. Now the normal response (at least for me), would be to sell the $40 call for $0.20. Except, an important thing to consider would be if you compare your options vs. establishing a new position if you were to simply exit the position, if you sell a $37.50 option, that would give you a 10% return. That kind of return is something that you would most likely not be able to find if you tried to create a new position.
The profit/loss info is below:
10/7/2009 -- Bought 100 FLR @ 47.07
10/7/2009 -- Sold To Open 1 FLR November $50 Call @ 1.70
11/20/2009 -- Call Expired
11/23/2009 -- Sold To Open 1 FLR December $45 Call @ 0.7
11/25/2009 -- Bought To Close 1 FLR December $45 Call @ 1.15
The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Cost Basis: $4582.00
Potential Gain: N/A
Potential Annualized Gain If Called At Expiration: N/A
Update Transaction - United States Natural Gas (UNG)
The performance metrics are below:
7/23/2009 -- Bought 100 UNG @ 13.14
7/23/2009 -- Sold To Open 1 UNG July $13 Call @ 0.88
8/22/2009 -- Call Expired
8/30/2009 -- Sold To Open 1 UNG October $14 @ 0.25
9/2/2009 -- Bought To Close 1 UNG October $14 @ 0.18
9/2/2009 -- Sold To Open 1 UNG January $12 @ 0.68
9/10/2009 - Bought To Close 1 UNG January $12 @ 0.9
9/10/2009 -- Sold To Open 1 UNG January $13 @ 1.29
11/6/2009 -- Bought To Open 1 UNG December $9 Put @ 0.41
11/18/2009 -- Sold To Close 1 UNG December $9 Put @ 0.5025
11/25/2009 -- Bought To Close 1 UNG January $13 Put @ 0.12
The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $1226.00
Current Cost Average: $12.355
Downside Coverage: None
Possible Max Upside: Unlimited
Annualized Max Upside: Unlimited
7/23/2009 -- Bought 100 UNG @ 13.14
7/23/2009 -- Sold To Open 1 UNG July $13 Call @ 0.88
8/22/2009 -- Call Expired
8/30/2009 -- Sold To Open 1 UNG October $14 @ 0.25
9/2/2009 -- Bought To Close 1 UNG October $14 @ 0.18
9/2/2009 -- Sold To Open 1 UNG January $12 @ 0.68
9/10/2009 - Bought To Close 1 UNG January $12 @ 0.9
9/10/2009 -- Sold To Open 1 UNG January $13 @ 1.29
11/6/2009 -- Bought To Open 1 UNG December $9 Put @ 0.41
11/18/2009 -- Sold To Close 1 UNG December $9 Put @ 0.5025
11/25/2009 -- Bought To Close 1 UNG January $13 Put @ 0.12
The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $1226.00
Current Cost Average: $12.355
Downside Coverage: None
Possible Max Upside: Unlimited
Annualized Max Upside: Unlimited
Monday, November 23, 2009
Update Transaction - Applied Materials (AMAT), Jack In The Box (JACK)
Below are positions which have been continued following the November expiration. The new profit/loss info is below:
Applied Materials (AMAT)
10/20/2009 -- Bought 100 AMAT @ 13.39
10/20/2009 -- Sold To Open 1 AMAT November $13 Call @ 0.76
11/9/2009 -- Dividend @ 0.06
11/20/2009 -- Call Expired
11/23/2009 -- Sold To Open 1 AMAT December $13 Call @ 0.2
The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Cost Basis: 1237.00
Potential Gain If Called At Expiration: 4.59%
PotentialAnnualized Gain If Called At Expiration: 27.94%
Jack In The Box (JACK)
9/29/2009 -- Sold To Open 1 JACK November $20 Put @ 0.95
11/20/2009 -- Stock Purchase @ 20
11/23/2009 -- Sold To Open 1 JACK December $20 Call @ 0.25
The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Current Cost Basis: 18.85
Possible Max Upside: 5.76%
Annualized Max Upside: 25.95%
Applied Materials (AMAT)
10/20/2009 -- Bought 100 AMAT @ 13.39
10/20/2009 -- Sold To Open 1 AMAT November $13 Call @ 0.76
11/9/2009 -- Dividend @ 0.06
11/20/2009 -- Call Expired
11/23/2009 -- Sold To Open 1 AMAT December $13 Call @ 0.2
The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Cost Basis: 1237.00
Potential Gain If Called At Expiration: 4.59%
PotentialAnnualized Gain If Called At Expiration: 27.94%
Jack In The Box (JACK)
9/29/2009 -- Sold To Open 1 JACK November $20 Put @ 0.95
11/20/2009 -- Stock Purchase @ 20
11/23/2009 -- Sold To Open 1 JACK December $20 Call @ 0.25
The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Current Cost Basis: 18.85
Possible Max Upside: 5.76%
Annualized Max Upside: 25.95%
Update Transaction - United States Natural Gas (UNG)
As I mentioned in my previous post for this position, I was considering selling a longer-term call against it as I would not be able to get enough premium if i sold a current month option. As such, I decided to sell an April $12 option on one of my 3 UNG positions. I only sold it on one of them, because I still think that UNG could move higher, but I want to hedge at least one of my positions. The new profit/loss info is below:
7/2/2009 -- Sold To Open 1 UNG August $13 Put @ 1.15
8/21/2009 -- Stock Purchase @ $13
8/24/2009 -- Sold To Open 1 UNG October $13 Call @ 0.60
9/2/2009 -- Bought To Open 1 UNG October $8 Put @ .4275
10/16/2009 -- Option Expiration
10/20/2009 -- Sold To Open 1 UNG November $12 Call @ .45
11/6/2009 -- Bought To Open 1 UNG December $9 Put @ 0.41
11/18/2009 -- Sold To Close 1 UNG December $9 Put @ 0.5025
11/23/2009 -- Sold To Open 1 UNG April $12 Call @ 0.38
The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Purchase Price: $1190.00
Current Cost Average: $10.805
Commissions (Included In Cost): $40
Possible Max Upside: 6.85%
Annualized Max Upside: 17.60%
7/2/2009 -- Sold To Open 1 UNG August $13 Put @ 1.15
8/21/2009 -- Stock Purchase @ $13
8/24/2009 -- Sold To Open 1 UNG October $13 Call @ 0.60
9/2/2009 -- Bought To Open 1 UNG October $8 Put @ .4275
10/16/2009 -- Option Expiration
10/20/2009 -- Sold To Open 1 UNG November $12 Call @ .45
11/6/2009 -- Bought To Open 1 UNG December $9 Put @ 0.41
11/18/2009 -- Sold To Close 1 UNG December $9 Put @ 0.5025
11/23/2009 -- Sold To Open 1 UNG April $12 Call @ 0.38
The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Purchase Price: $1190.00
Current Cost Average: $10.805
Commissions (Included In Cost): $40
Possible Max Upside: 6.85%
Annualized Max Upside: 17.60%
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