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 Generated | 4.03% |
| Annualized Income Generated | 29.43% |
| Net Profit If Successful | $50.40 |
| Percent Return If Successful | 4.03% |
| Annualized Return If Successful | 29.43% |
| Days Held to Expiration | 50 days |
Trade History
| Date | Stock | Description | Transaction | Status | Stock Investment | Income Generated |
|---|---|---|---|---|---|---|
| 11/29/2012 | ARO | Initial Stock Position | BTO 100 ARO @ 13.20 | ($1,320.00) | ||
| 11/29/2012 | ARO | Initial Call Option | STO 1 Dec12 12.00 Call @ 1.35 | Closed | $120.00 | $14.52 |
| 12/21/2012 | ARO | Buy Back | BTC 1 Dec12 12.00 Call @ -1.13 | ($120.00) | $6.94 | |
| 12/21/2012 | ARO | Roll Out/Up | STO 1 Jan13 12.50 Call @ 0.99 | $70.00 | $28.94 | |
| 1/18/2013 | ARO | Totals | ($1,250.00) | $50.40 | ||
| DTE | 50 | 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 Generated | 3.81% |
| Annualized Income Generated | 27.79% |
| Net Profit If Successful | $47.58 |
| Percent Return If Successful | 3.81% |
| Annualized Return If Successful | 27.79% |
| Days Held to Expiration | 50 days |
Trade History
| Date | Stock | Description | Transaction | Status | Stock Investment | Income Generated |
|---|---|---|---|---|---|---|
| 11/29/2012 | ARO | CSP Margin Used | CSP 100 ARO @ 12.00 | Closed | ($1,200.00) | |
| 11/29/2012 | ARO | Initial Put Option | STO 1 Dec12 12.00 Put @ 0.14 | Closed | $14.12 | |
| 12/21/2012 | ARO | Buy Back | BTC 1 Dec12 12.00 Put @ -0.05 | ($5.48) | ||
| 12/21/2012 | ARO | CSP Margin Returned | CSP 100 ARO @ -12.00 | $1,200.00 | ||
| 12/21/2012 | ARO | CSP Margin Used | CSP 100 ARO @ 12.50 | ($1,250.00) | ||
| 12/21/2012 | ARO | Roll Out/Up | STO 1 Jan13 12.50 Put @ 0.39 | $38.94 | ||
| 1/18/2013 | ARO | Totals | ($1,250.00) | $47.58 | ||
| DTE | 50 | Percent Income/Annualized | 3.81% | 27.79% |
