Sunday, December 23, 2012

VRSN - Closed

The VeriSign (VRSN) mmmyy 00.00 Put expired and the position was closed. All prices include IB commissions.

Position Summary

Cost Basis$2,500.00
Net Profit$28.94
Percent Return1.16%
Annualized Return16.90%
Days Held to Expiration25 days

Trade History

DateStockDescriptionTransactionStatusStock InvestmentIncome Generated
11/26/2012VRSNCSP Margin UsedCSP 100 VRSN @ 25.00 ($2,500.00) 
11/26/2012VRSNInitial Put OptionSTO 1 Dec12 25.00 Put @ 0.29Expired $28.94
12/21/2012VRSNCSP Margin ReturnedCSP 100 VRSN @ -25.00  $2,500.00
12/21/2012VRSN Net Cost/Profit-Loss ($2,500.00)$28.94
DTE25 Percent Profit-Loss/Annualized 1.16%16.90%

USO - Closed

The United States Oil (USO) Dec12 30.00 Put expired and the position was closed. All prices include IB commissions.

Position Summary

Cost Basis$3,000.00
Net Profit$13.24
Percent Return0.44%
Annualized Return16.11%
Days Held to Expiration10 days

Trade History

DateStockDescriptionTransactionStatusStock InvestmentIncome Generated
12/11/2012USOCSP Margin UsedCSP 100 USO @ 30.00 ($3,000.00) 
12/11/2012USOInitial Put OptionSTO 1 Dec12 30.00 Put @ 0.13Expired $13.24
12/21/2012USOCSP Margin ReturnedCSP 100 USO @ -30.00  $3,000.00
12/21/2012USO Net Cost/Profit-Loss ($3,000.00)$13.24
DTE10 Percent Profit-Loss/Annualized 0.44%16.11%

TBT - Closed

The ProShares UltraShort 20+ Year Treasury (TBT) Dec12 60.00 Call was exercised and the position was closed. All prices include IB commissions.

Position Summary

Cost Basis$6,000.00
Net Profit$268.20
Percent Return4.47%
Annualized Return22.05%
Days Held to Expiration74 days

Trade History

DateStockDescriptionTransactionStatusStock InvestmentIncome Generated
10/8/2012TBTCSP Margin UsedCSP 100 TBT @ 60.00 ($6,000.00) 
10/8/2012TBTInitial Put OptionSTO 1 Nov12 60.00 Put @ 0.96Exercised $95.94
11/16/2012TBTCSP Margin ReturnedCSP 100 TBT @ -60.00 $6,000.00 
11/16/2012TBTStock AssignedEX 1 Nov12 60.00 Put @ -60.00 ($6,000.00) 
11/19/2012TBTContinued TradeSTO 1 Dec12 60.00 Call @ 1.72Exercised $172.26
12/21/2012TBTStock CalledEX 1 Dec12 60.00 Call @ 60.00  $6,000.00
12/21/2012TBT Net Cost/Profit-Loss ($6,000.00)$268.20
DTE74 Percent Profit-Loss/Annualized 4.47%22.05%

SVXY - Closed

The ProShares Short VIX Short-Term Futures (SVXY) Dec12 60.00 Put expired and the position was closed. All prices include IB commissions.

Position Summary

Cost Basis$6,000.00
Net Profit$58.94
Percent Return0.98%
Annualized Return21.09%
Days Held to Expiration17 days

Trade History

DateStockDescriptionTransactionStatusStock InvestmentIncome Generated
12/4/2012SVXYCSP Margin UsedCSP 100 SVXY @ 60.00 ($6,000.00) 
12/4/2012SVXYInitial Put OptionSTO 1 Dec12 60.00 Put @ 0.59Expired $58.94
12/21/2012SVXYCSP Margin ReturnedCSP 100 SVXY @ -60.00  $6,000.00
12/21/2012SVXY Net Cost/Profit-Loss ($6,000.00)$58.94
DTE17 Percent Profit-Loss/Annualized 0.98%21.09%

SU - Closed

The Suncor Energy (SU) Dec12 31.00 Put expired and the position was closed. All prices include IB commissions.

Position Summary

Cost Basis$3,100.00
Net Profit$65.94
Percent Return2.13%
Annualized Return13.86%
Days Held to Expiration56 days

Trade History

DateStockDescriptionTransactionStatusStock InvestmentIncome Generated
10/26/2012SUCSP Margin UsedCSP 100 SU @ 31.00 ($3,100.00) 
10/26/2012SUInitial Put OptionSTO 1 Dec12 31.00 Put @ 0.66Expired $65.94
12/21/2012SUCSP Margin ReturnedCSP 100 SU @ -31.00  $3,100.00
12/21/2012SU Net Cost/Profit-Loss ($3,100.00)$65.94
DTE56 Percent Profit-Loss/Annualized 2.13%13.86%

STRA - Closed

The Strayer Education Inc (STRA) Dec12 40.00 Put expired and the position was closed. All prices include IB commissions.

Position Summary

Cost Basis$4,000.00
Net Profit$76.94
Percent Return1.92%
Annualized Return12.10%
Days Held to Expiration58 days

Trade History

DateStockDescriptionTransactionStatusStock InvestmentIncome Generated
10/24/2012STRACSP Margin UsedCSP 100 STRA @ 40.00 ($4,000.00) 
10/24/2012STRAInitial Put OptionSTO 1 Dec12 40.00 Put @ 0.77Expired $76.94
12/21/2012STRACSP Margin ReturnedCSP 100 STRA @ -40.00  $4,000.00
12/21/2012STRA Net Cost/Profit-Loss ($4,000.00)$76.94
DTE58 Percent Profit-Loss/Annualized 1.92%12.10%

SCHN - Closed

The Schnitzer Steel Industries (SCHN) Dec12 25.00 Put expired and the position was closed. All prices include IB commissions.

Position Summary

Cost Basis$2,500.00
Net Profit$73.94
Percent Return2.96%
Annualized Return19.28%
Days Held to Expiration56 days

Trade History

DateStockDescriptionTransactionStatusStock InvestmentIncome Generated
10/26/2012SCHNCSP Margin UsedCSP 100 SCHN @ 25.00 ($2,500.00) 
10/26/2012SCHNInitial Put OptionSTO 1 Dec12 25.00 Put @ 0.74Expired $73.94
12/21/2012SCHNCSP Margin ReturnedCSP 100 SCHN @ -25.00  $2,500.00
12/21/2012SCHN Net Cost/Profit-Loss ($2,500.00)$73.94
DTE56 Percent Profit-Loss/Annualized 2.96%19.28%

PH - Closed

The Parker Hannifin Corp (PH) Dec12 70.00 expired and the position was closed. All prices include IB commissions.

Position Summary

Cost Basis$7,000.00
Net Profit$145.94
Percent Return2.08%
Annualized Return13.12%
Days Held to Expiration58 days

Trade History

DateStockDescriptionTransactionStatusStock InvestmentIncome Generated
10/24/2012PHCSP Margin UsedCSP 100 PH @ 70.00 ($7,000.00) 
10/24/2012PHInitial Put OptionSTO 1 Dec12 70.00 Put @ 1.46Expired $145.94
12/21/2012PHCSP Margin ReturnedCSP 100 PH @ -70.00  $7,000.00
12/21/2012PH Net Cost/Profit-Loss ($7,000.00)$145.94
DTE58 Percent Profit-Loss/Annualized 2.08%13.12%

OXY - Closed

The Occidental Petroleum Corporation (OXY) Dec12 75.00 Put expired and the position was closed. All prices include IB commissions.

Position Summary

Cost Basis$7,500.00
Net Profit$161.94
Percent Return2.16%
Annualized Return14.07%
Days Held to Expiration56 days

Trade History

DateStockDescriptionTransactionStatusStock InvestmentIncome Generated
10/26/2012OXYCSP Margin UsedCSP 100 OXY @ 75.00 ($7,500.00) 
10/26/2012OXYInitial Put OptionSTO 1 Dec12 75.00 Put @ 1.62Expired $161.94
12/21/2012OXYCSP Margin ReturnedCSP 100 OXY @ -75.00  $7,500.00
12/21/2012OXY Net Cost/Profit-Loss ($7,500.00)$161.94
DTE56 Percent Profit-Loss/Annualized 2.16%14.07%

NSC - Closed

The Norfolk Southern Corporation (NSC) Dec12 60.00 Call was exercised and the position was closed. All prices include IB commissions.

Position Summary

Cost Basis$6,000.00
Net Profit$156.88
Percent Return2.61%
Annualized Return16.45%
Days Held to Expiration58 days

Trade History

DateStockDescriptionTransactionStatusStock InvestmentIncome Generated
10/24/2012NSCCSP Margin UsedCSP 100 NSC @ 60.00 ($6,000.00) 
10/24/2012NSCInitial Put OptionSTO 1 Nov12 60.00 Put @ 1.05Exercised $104.94
11/16/2012NSCCSP Margin ReturnedCSP 100 NSC @ -60.00 $6,000.00 
11/16/2012NSCStock AssignedEX 1 Nov12 60.00 Put @ -60.00 ($6,000.00) 
11/19/2012NSCContinued TradeSTO 1 Dec12 60.00 Call @ 0.52Exercised $51.94
12/21/2012NSCStock CalledEX 1 Dec12 60.00 Call @ 60.00  $6,000.00
12/21/2012NSC Net Cost/Profit-Loss ($6,000.00)$156.88
DTE58 Percent Profit-Loss/Annualized 2.61%16.45%

IWM - Closed

The iShares Russell 2000 Index (IWM) Dec12 78.00 Put expired and the position was closed. All prices include IB commissions.

Position Summary

Cost Basis$7,800.00
Net Profit$36.76
Percent Return0.47%
Annualized Return10.12%
Days Held to Expiration17 days

Trade History

DateStockDescriptionTransactionStatusStock InvestmentIncome Generated
12/4/2012IWMCSP Margin UsedCSP 100 IWM @ 78.00 ($7,800.00) 
12/4/2012IWMInitial Put OptionSTO 1 Dec12 78.00 Put @ 0.37Expired $36.76
12/21/2012IWMCSP Margin ReturnedCSP 100 IWM @ -78.00  $7,800.00
12/21/2012IWM Net Cost/Profit-Loss ($7,800.00)$36.76
DTE17 Percent Profit-Loss/Annualized 0.47%10.12%

GDX - Closed

The Market Vectors Gold Miners (GDX) Dec12 44.00 Put expired and the position was closed. All prices include IB commissions.

Position Summary

Cost Basis$4,400.00
Net Profit$20.94
Percent Return0.48%
Annualized Return17.37%
Days Held to Expiration10 days

Trade History

DateStockDescriptionTransactionStatusStock InvestmentIncome Generated
12/11/2012GDXCSP Margin UsedCSP 100 GDX @ 44.00 ($4,400.00) 
12/11/2012GDXInitial Put OptionSTO 1 Dec12 44.00 Put @ 0.21Expired $20.94
12/21/2012GDXCSP Margin ReturnedCSP 100 GDX @ -44.00  $4,400.00
12/21/2012GDX Net Cost/Profit-Loss ($4,400.00)$20.94
DTE10 Percent Profit-Loss/Annualized 0.48%17.37%

EFA - Closed

The iShares MSCI EAFE Index (EFA) Dec12 53.00 Put expired and the position was closed. All prices include IB commissions.

Position Summary

Cost Basis$5,300.00
Net Profit$27.69
Percent Return0.52%
Annualized Return11.22%
Days Held to Expiration17 days

Trade History

DateStockDescriptionTransactionStatusStock InvestmentIncome Generated
12/4/2012EFACSP Margin UsedCSP 100 EFA @ 53.00 ($5,300.00) 
12/4/2012EFAInitial Put OptionSTO 1 Dec12 53.00 Put @ 0.28Expired $27.69
12/21/2012EFACSP Margin ReturnedCSP 100 EFA @ -53.00  $5,300.00
12/21/2012EFA Net Cost/Profit-Loss ($5,300.00)$27.69
DTE17 Percent Profit-Loss/Annualized 0.52%11.22%

EEM - Closed

The iShares MSCI Emerging Markets Index (EEM) Dec12 40.00 Put expired and the position was closed. All prices include IB commissions.

Position Summary

Cost Basis$4,000.00
Net Profit$22.24
Percent Return0.56%
Annualized Return11.94%
Days Held to Expiration17 days

Trade History

DateStockDescriptionTransactionStatusStock InvestmentIncome Generated
12/4/2012EEMCSP Margin UsedCSP 100 EEM @ 40.00 ($4,000.00) 
12/4/2012EEMInitial Put OptionSTO 1 Dec12 40.00 Put @ 0.22Expired $22.24
12/21/2012EEMCSP Margin ReturnedCSP 100 EEM @ -40.00  $4,000.00
12/21/2012EEM Net Cost/Profit-Loss ($4,000.00)$22.24
DTE17 Percent Profit-Loss/Annualized 0.56%11.94%

COST - Closed

The Costco Wholesale (COST) Dec12 85.50 Put expired and the position was closed. All prices include IB commissions.

This CSP position was initially established at the $92.50 strike but the put strike was adjusted to $85.50 due to a special $7 dividend on 12/06. This lowered my cost basis which increased the percent return.

Position Summary

Cost Basis$8,550.00
Net Profit$64.94
Percent Return0.76%
Annualized Return11.09%
Days Held to Expiration25 days

Trade History

DateStockDescriptionTransactionStatusStock InvestmentIncome Generated
11/26/2012COSTCSP Margin UsedCSP 100 COST @ 92.50Adjusted($9,250.00) 
11/26/2012COSTInitial Put OptionSTO 1 Dec12 92.50 Put @ 0.65Adjusted $64.94
12/6/2012COSTCSP Margin ReturnedCSP 100 COST @ -92.50 $9,250.00 
12/6/2012COSTAdjusted CSP Margin UsedCSP 100 COST @ 85.50 ($8,550.00) 
12/6/2012COSTAdjusted Put OptionSTO 1 Dec12 85.50 Put @ 0.00Expired $0.00
12/21/2012COSTCSP Margin ReturnedCSP 100 COST @ -85.50  $8,550.00
12/21/2012COST Net Cost/Profit-Loss ($8,550.00)$64.94
DTE25 Percent Profit-Loss/Annualized 0.76%11.09%

BTU - Closed

The Peabody Energy (BTU) Dec12 24.00 Put expired and the position was closed. All prices include IB commissions.

Position Summary

Cost Basis$2,400.00
Net Profit$68.24
Percent Return2.84%
Annualized Return18.53%
Days Held to Expiration56 days

Trade History

DateStockDescriptionTransactionStatusStock InvestmentIncome Generated
10/26/2012BTUCSP Margin UsedCSP 100 BTU @ 24.00 ($2,400.00) 
10/26/2012BTUInitial Put OptionSTO 1 Dec12 24.00 Put @ 0.68Expired $68.24
12/21/2012BTUCSP Margin ReturnedCSP 100 BTU @ -24.00  $2,400.00
12/21/2012BTU Net Cost/Profit-Loss ($2,400.00)$68.24
DTE56 Percent Profit-Loss/Annualized 2.84%18.53%

ALTR - Closed

The Altera Corp (ALTR) Dec12 27.00 Put expired and the position was closed. All prices include IB commissions.

Position Summary

Cost Basis$2,700.00
Net Profit$54.94
Percent Return2.03%
Annualized Return12.81%
Days Held to Expiration58 days

Trade History

DateStockDescriptionTransactionStatusStock InvestmentIncome Generated
10/24/2012ALTRCSP Margin UsedCSP 100 ALTR @ 27.00 ($2,700.00) 
10/24/2012ALTRInitial Put OptionSTO 1 Dec12 27.00 Put @ 0.55Expired $54.94
12/21/2012ALTRCSP Margin ReturnedCSP 100 ALTR @ -27.00  $2,700.00
12/21/2012ALTR Net Cost/Profit-Loss ($2,700.00)$54.94
DTE58 Percent Profit-Loss/Annualized 2.03%12.81%

Friday, December 21, 2012

ARO CC vs CSP - Adjustment

This is an ongoing position in ARO to show that CC's and CSP's are equivalent positions. Today I adjusted both positions by rolling the options out to Jan and up to a higher strike, in order to avoid assignment on the CC position.

Since the original call had $120 of intrinsic value, the difference between what I paid for the stock and the ITM strike I sold ($1320-$1200), which was used to lower the cost basis, I had to add it back when I bought the call back. The new strike price of $12.50, which again is lower than what I paid for the stock, has intrinsic value of $70 ($1320-$1250), which again will be used to lower the cost basis.

When accounting for intrinsic value in this manner, the cost basis of the CC becomes the same as the cost basis of the CSP, which is the strike price, and the extrinsic value represents the true income generated, making it easier for comparison.

Below are the details of both positions. I'll provide ongoing updates as the positions are managed.

CC Position Summary

Aeropostale (ARO). All prices include IB commissions.

Cost Basis($1,250.00)
Income Generated$50.40
Percent Income Generated4.03%
Annualized Income Generated29.43%
Net Profit If Successful$50.40
Percent Return If Successful4.03%
Annualized Return If Successful29.43%
Days Held to Expiration50 days

Trade History

DateStockDescriptionTransactionStatusStock InvestmentIncome Generated
11/29/2012AROInitial Stock PositionBTO 100 ARO @ 13.20 ($1,320.00) 
11/29/2012AROInitial Call OptionSTO 1 Dec12 12.00 Call @ 1.35Closed$120.00$14.52
12/21/2012AROBuy BackBTC 1 Dec12 12.00 Call @ -1.13 ($120.00)$6.94
12/21/2012ARORoll Out/UpSTO 1 Jan13 12.50 Call @ 0.99 $70.00$28.94
1/18/2013ARO Totals ($1,250.00)$50.40
DTE50 Percent Income/Annualized 4.03%29.43%

CSP Position Summary

Aeropostale (ARO). All prices include IB commissions.

Cost Basis($1,250.00)
Income Generated$47.58
Percent Income Generated3.81%
Annualized Income Generated27.79%
Net Profit If Successful$47.58
Percent Return If Successful3.81%
Annualized Return If Successful27.79%
Days Held to Expiration50 days

Trade History

DateStockDescriptionTransactionStatusStock InvestmentIncome Generated
11/29/2012AROCSP Margin UsedCSP 100 ARO @ 12.00Closed($1,200.00) 
11/29/2012AROInitial Put OptionSTO 1 Dec12 12.00 Put @ 0.14Closed $14.12
12/21/2012AROBuy BackBTC 1 Dec12 12.00 Put @ -0.05  ($5.48)
12/21/2012AROCSP Margin ReturnedCSP 100 ARO @ -12.00 $1,200.00 
12/21/2012AROCSP Margin UsedCSP 100 ARO @ 12.50 ($1,250.00) 
12/21/2012ARORoll Out/UpSTO 1 Jan13 12.50 Put @ 0.39  $38.94
1/18/2013ARO Totals ($1,250.00)$47.58
DTE50 Percent Income/Annualized 3.81%27.79%

Tuesday, December 11, 2012

USO - New Position

A new CSP position was established today on United States Oil (USO). All prices include IB commissions.

DateStockDescriptionTransactionStatusStock InvestmentIncome Generated
12/11/2012USOCSP Margin UsedCSP 100 USO @ 30.00 ($3,000.00) 
12/11/2012USOInitial Put OptionSTO 1 Dec12 30.00 Put @ 0.13  $13.24

Position Summary

Cost Basis($3,000.00)
Income Generated$13.24
Percent Income Generated0.44%
Annualized Income Generated16.11%
Net Profit If Closed$13.24
Percent Return If Closed0.44%
Annualized Return If Closed16.11%
Days Held to Expiration10 days

GDX - New Position

A new CSP position was established today on Market Vectors Gold Miners (GDX). All prices include IB commissions.

DateStockDescriptionTransactionStatusStock InvestmentIncome Generated
12/11/2012GDXCSP Margin UsedCSP 100 GDX @ 44.00 ($4,400.00) 
12/11/2012GDXInitial Put OptionSTO 1 Dec12 44.00 Put @ 0.21  $20.94

Position Summary

Cost Basis($4,400.00)
Income Generated$20.94
Percent Income Generated0.48%
Annualized Income Generated17.37%
Net Profit If Closed$20.94
Percent Return If Closed0.48%
Annualized Return If Closed17.37%
Days Held to Expiration10 days

Wednesday, December 5, 2012

AVP - Adjustment

The following adjustment was made today on Avon Products Inc (AVP). All prices include IB commissions.

CriteriaValue
Dividend Champions StatusDeleted*
Years of Consecutive Dividend Increases0
Fair Value Estimate$15.00**
Target Buy Price$7.50
Target Margin of Safety50.00%
Actual Buy Price$26.00
Actual Margin of Safety-73.33%

*The dividend was lowered and AVP was deleted from the Dividend Contenders list.

**Fair Value was lowered from $36 to $15 since inception, which turned my 27.78% Margin of Safety into a 73.33% Premium.

DateStockDescriptionTransactionStatusStock InvestmentIncome Generated
12/5/2012AVPContinued TradeSTO 2 Jan13 15.00 Call @ 0.39  $78.68

Current Position Summary

Cost Basis($5,200.00)
Income Generated$554.76
Percent Income Generated10.67%
Annualized Income Generated6.43%
Net Profit If Closed($1,645.24)
Percent Return If Closed-31.64%
Annualized Return If Closed-19.06%
Days Held to Expiration606 days

Trade History

DateStockDescriptionTransactionStatusStock InvestmentIncome Generated
5/23/2011AVPCSP Margin UsedCSP 200 AVP @ 26.00 ($5,200.00) 
5/23/2011AVPInitial Put OptionSTO 2 Oct11 26.00 Put @ 0.82Exercised $164.56
10/21/2011AVPCSP Margin ReturnedCSP 200 AVP @ -26.00 $5,200.00 
10/21/2011AVPStock AssignedEX 2 Oct11 26.00 Put @ -26.00 ($5,200.00) 
12/1/2011AVPDividend ReceivedDIV 200 Dividend @ 0.23  $46.00
3/1/2012AVPDividend ReceivedDIV 200 Dividend @ 0.23  $46.00
4/4/2012AVPContinued TradeSTO 2 May12 25.00 Call @ 0.34Expired $68.55
6/1/2012AVPDividend ReceivedDIV 200 Dividend @ 0.23  $46.00
7/27/2012AVPContinued TradeSTO 2 Aug12 19.00 Call @ 0.09Expired $18.49
9/4/2012AVPDividend ReceivedDIV 200 Dividend @ 0.23  $46.00
9/14/2012AVPContinued TradeSTO 2 Oct12 19.00 Call @ 0.14  $28.48
12/3/2012AVPDividend ReceivedDIV 200 Dividend @ 0.06  $12.00
12/5/2012AVPContinued TradeSTO 2 Jan13 15.00 Call @ 0.39  $78.68
1/18/2013AVP Totals ($5,200.00)$554.76
DTE606 Percent Income/Annualized 10.67%6.43%

Tuesday, December 4, 2012

TEX - New Position

A new CSP position was established today on Terex (TEX). All prices include IB commissions.

This is a position which requires a minimum of 15% Downside Protection and 15% Annualized Return.

CriteriaValue
Downside Protection15.27%
Annualized Return18.13%
Fair Value Estimate$33.00
Target Buy Price$19.80
Target Margin of Safety40.00%
Actual Buy Price$21.00
Actual Margin of Safety36.36%

DateStockDescriptionTransactionStatusStock InvestmentIncome Generated
12/4/2012TEXCSP Margin UsedCSP 100 TEX @ 21.00 ($2,100.00) 
12/4/2012TEXInitial Put OptionSTO 1 Jan13 21.00 Put @ 0.47  $46.94

Position Summary

Cost Basis($2,100.00)
Income Generated$46.94
Percent Income Generated2.24%
Annualized Income Generated18.13%
Net Profit If Closed$46.94
Percent Return If Closed2.24%
Annualized Return If Closed18.13%
Days Held to Expiration45 days

SVXY - New Position

A new CSP position was established today on ProShares Short VIX Short-Term Futures (SVXY). All prices include IB commissions.

DateStockDescriptionTransactionStatusStock InvestmentIncome Generated
12/4/2012SVXYCSP Margin UsedCSP 100 SVXY @ 60.00 ($6,000.00) 
12/4/2012SVXYInitial Put OptionSTO 1 Dec12 60.00 Put @ 0.59  $58.94

Position Summary

Cost Basis($6,000.00)
Income Generated$58.94
Percent Income Generated0.98%
Annualized Income Generated21.09%
Net Profit If Closed$58.94
Percent Return If Closed0.98%
Annualized Return If Closed21.09%
Days Held to Expiration17 days

IWM - New Position

A new CSP position was established today on iShares Russell 2000 Index (IWM). All prices include IB commissions.

DateStockDescriptionTransactionStatusStock InvestmentIncome Generated
12/4/2012IWMCSP Margin UsedCSP 100 IWM @ 78.00 ($7,800.00) 
12/4/2012IWMInitial Put OptionSTO 1 Dec12 78.00 Put @ 0.37  $36.76

Position Summary

Cost Basis($7,800.00)
Income Generated$36.76
Percent Income Generated0.47%
Annualized Income Generated10.12%
Net Profit If Closed$36.76
Percent Return If Closed0.47%
Annualized Return If Closed10.12%
Days Held to Expiration17 days

EFA - New Position

A new CSP position was established today on iShares MSCI EAFE Index (EFA). All prices include IB commissions.

DateStockDescriptionTransactionStatusStock InvestmentIncome Generated
12/4/2012EFACSP Margin UsedCSP 100 EFA @ 53.00 ($5,300.00) 
12/4/2012EFAInitial Put OptionSTO 1 Dec12 53.00 Put @ 0.28  $27.69

Position Summary

Cost Basis($5,300.00)
Income Generated$27.69
Percent Income Generated0.52%
Annualized Income Generated11.22%
Net Profit If Closed$27.69
Percent Return If Closed0.52%
Annualized Return If Closed11.22%
Days Held to Expiration17 days

EEM - New Position

A new CSP position was established today on iShares MSCI Emerging Markets Index (EEM). All prices include IB commissions.

DateStockDescriptionTransactionStatusStock InvestmentIncome Generated
12/4/2012EEMCSP Margin UsedCSP 100 EEM @ 40.00 ($4,000.00) 
12/4/2012EEMInitial Put OptionSTO 1 Dec12 40.00 Put @ 0.22  $22.24

Position Summary

Cost Basis($4,000.00)
Income Generated$22.24
Percent Income Generated0.56%
Annualized Income Generated11.94%
Net Profit If Closed$22.24
Percent Return If Closed0.56%
Annualized Return If Closed11.94%
Days Held to Expiration17 days

Thursday, November 29, 2012

ARO CC vs CSP - New Positions

Once again there's been a lot of discussion on the JustCoveredCalls Yahoo group on the equivalence of ITM CC's vs OTM CSP's, so I decided to provide a "real life" example to show that these are truely equivalent positions. The stock, Aeropostale (ARO), was chosen at random and an ITM CC and OTM CSP was established today.

As you should be aware, option premium consists of intrinsic value (the difference between the stock price and the ITM strike price) and extrinsic value (sometimes referred to as time value). An OTM put has all extrinsic value, whereas an ITM call has both intrinsic and extrinsic value. Due to put/call parity, the extrinsic value of an ITM call and OTM put at the same strike/expiration should be equivalent. Extrinsic value is your income or profit, whereas intrinsic value is Return of Capital, or put another way, a refund or rebate on your investment. It's like going to the store with $20, buying a $20 product, and getting a $5 instant rebate. You actually paid $15 for the product and have $5 of your original $20 back in your hand. You didn't earn $5, you saved $5.

In the CC example below, you'll see that the call premium was split into two columns. The intrinsic value in the Stock Investment column, reducing the cost basis to the strike price of the call, and the extrinsic value in the Income Generated column. The $120.00 intrinsic value is back into the account, available for reinvestment, and is no longer part of the CC position. When accounting for it in this manner, the cost basis of the CC becomes the same as the cost basis of the CSP, which is the strike price, and the extrinsic value represents the true income generated, making it easier for comparison.

Below are the details of both positions. I'll provide ongoing updates as the positions are managed.

CC Position Summary

Aeropostale (ARO). All prices include IB commissions.

Cost Basis($1,200.00)
Income Generated$14.52
Percent Income Generated1.21%
Annualized Income Generated20.08%
Net Profit If Successful$14.52
Percent Return If Successful1.21%
Annualized Return If Successful20.08%
Days Held to Expiration22 days

Trade History

DateStockDescriptionTransactionStatusStock InvestmentIncome Generated
11/29/2012AROInitial Stock PositionBTO 100 ARO @ 13.20 ($1,320.00) 
11/29/2012AROInitial Call OptionSTO 1 Dec12 12.00 Call @ 1.35 $120.00$14.52
12/21/2012ARO Totals ($1,200.00)$14.52
DTE22 Percent Income/Annualized 1.21%20.08%

CSP Position Summary

Aeropostale (ARO). All prices include IB commissions.

Cost Basis($1,200.00)
Income Generated$14.12
Percent Income Generated1.18%
Annualized Income Generated19.52%
Net Profit If Successful$14.12
Percent Return If Successful1.18%
Annualized Return If Successful19.52%
Days Held to Expiration22 days

Trade History

DateStockDescriptionTransactionStatusStock InvestmentIncome Generated
11/29/2012AROCSP Margin UsedBTO 100 ARO @ 12.00 ($1,200.00) 
11/29/2012AROInitial Put OptionSTO 1 Dec12 12.00 Put @ 0.14  $14.12
12/21/2012ARO Totals ($1,200.00)$14.12
DTE22 Percent Income/Annualized 1.18%19.52%

Monday, November 26, 2012

VRSN - New Position

A new CSP position was established today on VeriSign (VRSN). All prices include IB commissions.

This is a position which requires a minimum of 15% Downside Protection and 15% Annualized Return.

CriteriaValue
Downside Protection37.73%
Annualized Return16.90%
Fair Value Estimate$48.00
Target Buy Price$28.80
Target Margin of Safety40.00%
Actual Buy Price$25.00
Actual Margin of Safety47.92%

DateStockDescriptionTransactionStatusStock InvestmentIncome Generated
11/26/2012VRSNCSP Margin UsedCSP 100 VRSN @ 25.00 ($2,500.00) 
11/26/2012VRSNInitial Put OptionSTO 1 Dec12 25.00 Put @ 0.29  $28.94

Position Summary

Cost Basis($2,500.00)
Income Generated$28.94
Percent Income Generated1.16%
Annualized Income Generated16.90%
Net Profit If Assigned$28.94
Percent Return If Assigned1.16%
Annualized Return If Assigned16.90%
Days Held to Expiration25 days

INTC - New Position

A new CSP position was established today on Intel Corp (INTC). All prices include IB commissions.

CriteriaValue
Dividend Champions StatusContender
Years of Consecutive Dividend Increases9
Fair Value Estimate$27.00
Target Buy Price$18.90
Target Margin of Safety20.00%
Actual Buy Price$19.00
Actual Margin of Safety29.63%

DateStockDescriptionTransactionStatusStock InvestmentIncome Generated
11/26/2012INTCCSP Margin UsedCSP 100 INTC @ 19.00 ($1,900.00) 
11/26/2012INTCInitial Put OptionSTO 1 Jan13 19.00 Put @ 0.42  $41.98

Position Summary

Cost Basis($1,900.00)
Income Generated$41.98
Percent Income Generated2.21%
Annualized Income Generated15.22%
Net Profit If Assigned$41.98
Percent Return If Assigned2.21%
Annualized Return If Assigned15.22%
Days Held to Expiration53 days

GES - New Position

A new CSP position was established today on Guess (GES). All prices include IB commissions.

This is a position which requires a minimum of 15% Downside Protection and 15% Annualized Return.

CriteriaValue
Downside Protection16.49%
Annualized Return16.31%
Fair Value Estimate$43.00
Target Buy Price$25.80
Target Margin of Safety40.00%
Actual Buy Price$21.00
Actual Margin of Safety51.16%

DateStockDescriptionTransactionStatusStock InvestmentIncome Generated
11/26/2012GESCSP Margin UsedCSP 100 GES @ 21.00 ($2,100.00) 
11/26/2012GESInitial Put OptionSTO 1 Jan13 21.00 Put @ 0.50  $49.74

Position Summary

Cost Basis($2,100.00)
Income Generated$49.74
Percent Income Generated2.37%
Annualized Income Generated16.31%
Net Profit If Assigned$49.74
Percent Return If Assigned2.37%
Annualized Return If Assigned16.31%
Days Held to Expiration53 days

COST - New Position

A new CSP position was established today on Costco Wholesale (COST). All prices include IB commissions.

CriteriaValue
Dividend Champions StatusContender
Years of Consecutive Dividend Increases9
Fair Value Estimate$116.00
Target Buy Price$92.80
Target Margin of Safety20.00%
Actual Buy Price$92.50
Actual Margin of Safety20.26%

DateStockDescriptionTransactionStatusStock InvestmentIncome Generated
11/26/2012COSTCSP Margin UsedCSP 100 COST @ 92.50 ($9,250.00) 
11/26/2012COSTInitial Put OptionSTO 1 Dec12 92.50 Put @ 0.65  $64.94

Position Summary

Cost Basis($9,250.00)
Income Generated$64.94
Percent Income Generated0.70%
Annualized Income Generated10.25%
Net Profit If Assigned$64.94
Percent Return If Assigned0.70%
Annualized Return If Assigned10.25%
Days Held to Expiration25 days

Monday, November 19, 2012

TEVA - Adjustment

The following adjustment was made today on Teva Pharmaceutical Industries Ltd (TEVA). All prices include IB commissions.

CriteriaValue
Dividend Champions StatusContender
Years of Consecutive Dividend Increases13
Fair Value Estimate$55.00
Target Buy Price$38.50
Target Margin of Safety30.00%
Actual Buy Price$40.00
Actual Margin of Safety27.27%

*Fair Value was lowered from $58 to $55 since inception which lowered my 31.03% Margin of Safety to 27.27%.

DateStockDescriptionTransactionStatusStock InvestmentIncome Generated
11/19/2012TEVAContinued TradeSTO 1 Dec12 40.00 Call @ 0.44  $44.24

Current Position Summary

Cost Basis($4,000.00)
Income Generated$160.55
Percent Income Generated4.01%
Annualized Income Generated5.35%
Net Profit If Assigned$160.55
Percent Return If Assigned4.01%
Annualized Return If Assigned5.35%
Days Held to Expiration274 days

Trade History

DateStockDescriptionTransactionStatusStock InvestmentIncome Generated
3/22/2012TEVACSP Margin UsedCSP 100 TEVA @ 40.00 ($4,000.00) 
3/22/2012TEVAInitial Put OptionSTO 1 May12 40.00 Put @ 0.51Exercised $50.97
5/18/2012TEVACSP Margin ReturnedCSP 100 TEVA @ -40.00 $4,000.00 
5/18/2012TEVAStock AssignedEX 1 May12 40.00 Put @ -40.00 ($4,000.00) 
6/25/2012TEVAContinued TradeSTO 1 Jul12 42.50 Call @ 0.19Expired $19.27
7/27/2012TEVAContinued TradeSTO 1 Sep12 45.00 Call @ 0.25Expired $25.24
9/4/2012TEVADividend ReceivedSTO 100 Dividend @ 0.25  $24.80
9/4/2012TEVAWitholding TaxTAX 1 Withholding Tax @ -0.04  ($3.97)
11/19/2012TEVAContinued TradeSTO 1 Dec12 40.00 Call @ 0.44  $44.24
12/21/2012TEVA Totals ($4,000.00)$160.55
DTE274 Percent Income/Annualized 4.01%5.35%

TBT - Adjustment

The following adjustment was made today on ProShares UltraShort 20+ Year Treasury (TBT). All prices include IB commissions.

DateStockDescriptionTransactionStatusStock InvestmentIncome Generated
11/19/2012TBTContinued TradeSTO 1 Dec12 60.00 Call @ 1.72  $172.26

Current Position Summary

Cost Basis($6,000.00)
Income Generated$268.20
Percent Income Generated4.47%
Annualized Income Generated22.05%
Net Profit If Assigned$268.20
Percent Return If Assigned4.47%
Annualized Return If Assigned22.05%
Days Held to Expiration74 days

Trade History

DateStockDescriptionTransactionStatusStock InvestmentIncome Generated
10/8/2012TBTCSP Margin UsedCSP 100 TBT @ 60.00 ($6,000.00) 
10/8/2012TBTInitial Put OptionSTO 1 Nov12 60.00 Put @ 0.96Exercised $95.94
11/16/2012TBTCSP Margin ReturnedCSP 100 TBT @ -60.00 $6,000.00 
11/16/2012TBTStock AssignedEX 1 Nov12 60.00 Put @ -60.00 ($6,000.00) 
11/19/2012TBTContinued TradeSTO 1 Dec12 60.00 Call @ 1.72  $172.26
12/21/2012TBT Totals ($6,000.00)$268.20
DTE74 Percent Income/Annualized 4.47%22.05%

NSC - Adjustment

The following adjustment was made today on Norfolk Southern Corporation (NSC). All prices include IB commissions.

CriteriaValue
Dividend Champions StatusContender
Years of Consecutive Dividend Increases11
Fair Value Estimate$85.00
Target Buy Price$59.20
Target Margin of Safety30.00%
Actual Buy Price$60.00
Actual Margin of Safety29.41%

DateStockDescriptionTransactionStatusStock InvestmentIncome Generated
11/19/2012NSCContinued TradeSTO 1 Dec12 60.00 Call @ 0.52  $51.94

Current Position Summary

Cost Basis($6,000.00)
Income Generated$156.88
Percent Income Generated2.61%
Annualized Income Generated16.45%
Net Profit If Assigned$156.88
Percent Return If Assigned2.61%
Annualized Return If Assigned16.45%
Days Held to Expiration58 days

Trade History

DateStockDescriptionTransactionStatusStock InvestmentIncome Generated
10/24/2012NSCCSP Margin UsedCSP 100 NSC @ 60.00 ($6,000.00) 
10/24/2012NSCInitial Put OptionSTO 1 Nov12 60.00 Put @ 1.05Exercised $104.94
11/16/2012NSCCSP Margin ReturnedCSP 100 NSC @ -60.00 $6,000.00 
11/16/2012NSCStock AssignedEX 1 Nov12 60.00 Put @ -60.00 ($6,000.00) 
11/19/2012NSCContinued TradeSTO 1 Dec12 60.00 Call @ 0.52  $51.94
12/21/2012NSC Totals ($6,000.00)$156.88
DTE58 Percent Income/Annualized 2.61%16.45%

CSX - Adjustment

The following adjustment was made today on CSX Corporation (CSX). All prices include IB commissions.

CriteriaValue
Dividend Champions StatusChallenger
Years of Consecutive Dividend Increases8
Fair Value Estimate$31.00
Target Buy Price$21.70
Target Margin of Safety30.00%
Actual Buy Price$20.00
Actual Margin of Safety35.48%

DateStockDescriptionTransactionStatusStock InvestmentIncome Generated
11/19/2012CSXContinued TradeSTO 1 Dec12 20.00 Call @ 0.24  $24.09

Current Position Summary

Cost Basis($2,000.00)
Income Generated$51.33
Percent Income Generated2.57%
Annualized Income Generated16.15%
Net Profit If Assigned$51.33
Percent Return If Assigned2.57%
Annualized Return If Assigned16.15%
Days Held to Expiration58 days

Trade History

DateStockDescriptionTransactionStatusStock InvestmentIncome Generated
10/24/2012CSXCSP Margin UsedCSP 100 CSX @ 20.00 ($2,000.00) 
10/24/2012CSXInitial Put OptionSTO 1 Nov12 20.00 Put @ 0.27Exercised $27.24
11/16/2012CSXCSP Margin ReturnedCSP 100 CSX @ -20.00 $2,000.00 
11/16/2012CSXStock AssignedEX 1 Nov12 20.00 Put @ -20.00 ($2,000.00) 
11/19/2012CSXContinued TradeSTO 1 Dec12 20.00 Call @ 0.24  $24.09
12/21/2012CSX Totals ($2,000.00)$51.33
DTE58 Percent Income/Annualized 2.57%16.15%

Sunday, November 18, 2012

SVXY - Closed

The ProShares Short VIX Short-Term Futures (SVXY) Nov12 50.00 Put expired and the position was closed. All prices include IB commissions.

Position Summary

Cost Basis$5,000.00
Net Profit$58.94
Percent Return1.18%
Annualized Return11.03%
Days Held to Expiration39 days

Trade History

DateStockDescriptionTransactionStatusStock InvestmentIncome Generated
10/8/2012SVXYCSP Margin UsedCSP 100 SVXY @ 50.00 ($5,000.00) 
10/8/2012SVXYInitial Put OptionSTO 1 Nov12 50.00 Put @ 0.59Expired $58.94
11/16/2012SVXYCSP Margin ReturnedCSP 100 SVXY @ -50.00  $5,000.00
11/16/2012SVXY Net Cost/Profit-Loss ($5,000.00)$58.94
DTE39 Percent Profit-Loss/Annualized 1.18%11.03%

COV - Closed

The Covidien (COV) Nov12 52.50 Put expired and the position was closed. All prices include IB commissions.

Position Summary

Cost Basis$5,250.00
Net Profit$48.94
Percent Return0.93%
Annualized Return14.79%
Days Held to Expiration23 days

Trade History

DateStockDescriptionTransactionStatusStock InvestmentIncome Generated
10/24/2012COVCSP Margin UsedCSP 100 COV @ 52.50 ($5,250.00) 
10/24/2012COVInitial Put OptionSTO 1 Nov12 52.50 Put @ 0.49Expired $48.94
11/16/2012COVCSP Margin ReturnedCSP 100 COV @ -52.50  $5,250.00
11/16/2012COV Net Cost/Profit-Loss ($5,250.00)$48.94
DTE23 Percent Profit-Loss/Annualized 0.93%14.79%

ANF - Closed

The Abercrombie & Fitch (ANF) Nov12 25.00 Put expired and the position was closed. All prices include IB commissions.

Position Summary

Cost Basis$2,500.00
Net Profit$26.24
Percent Return1.05%
Annualized Return16.66%
Days Held to Expiration23 days

Trade History

DateStockDescriptionTransactionStatusStock InvestmentIncome Generated
10/24/2012ANFCSP Margin UsedCSP 100 ANF @ 25.00 ($2,500.00) 
10/24/2012ANFInitial Put OptionSTO 1 Nov12 25.00 Put @ 0.26Expired $26.24
11/16/2012ANFCSP Margin ReturnedCSP 100 ANF @ -25.00  $2,500.00
11/16/2012ANF Net Cost/Profit-Loss ($2,500.00)$26.24
DTE23 Percent Profit-Loss/Annualized 1.05%16.66%