Exercised CCJ calls, sold CCJ

I exercised the Jan2011 $20 calls I bought on CCJ. I then sold the stock for $40.84.

I bought the calls in June2010 for $4.50 per share. As the price of CCJ increased, the value of the calls increased apace.

At this time I had two profitable choices:

1) Exercise the calls. I would pay $20 for a stock currently selling around $40. I could then either hold CCJ in anticipation of further appreciation, or sell it immediately and bank the cash gain.
$ profit = (Revenue - Cost) * # shares
$ profit = ((current price) - (premium paid + strike price)) * # shares
$ profit = (($40.84) - ($4.50 + $20.00)) * # shares
For a profit of $1,634 per contract.

2) I could sell the calls to another buyer. The bid price for the calls at that point was about $20
$ profit = (Revenue - Cost) * # shares
$ profit = (current premium of calls - premium paid) * # shares
$ profit = ($20.00 - $4.50) * # shares
For a profit of $1,550 per contract.

It's useful to look at different scenarios to see which is more profitable.

Sold CDXS, bought more MAXY

A few weeks ago, MAXY spun of CDXS. I've now sold the CDXS shares I received. I bought more MAXY.

BRS, FNF, HNR calls expired

My calls on BRS, FNF, and HNR expired in-the-money over the weekend. I now own BRS @ $30, FNF @ $12.50, and HNR @ $5.00.

Bought LLL calls

Bought Jan 2013 $60 calls on LLL for $15.50 per share.

Closed SLW puts

Sold-to-close my December $21 puts on SLW, for $0.10 per share.

Sold DENN

Sold DENN for $3.15/share.

Bought TRAD

Bought TRAD at $6.72.

INTC Puts assigned early

The buyer of my Sept INTC $21 puts chose to exercise their option early--I bought INTC at $21, filling my targeted 5% allocation in this stock.

Sold SLW Puts

Sold Dec 2010 $21 puts on SLW for $1.15.

Bought EPM

Put 3% of my portfolio in EPM at $5.54 per share.

Bought PCL again

Bought PCL at $34.

Bought LLY&BHP, Bought POT puts

Bought LLY for $34.75.
Bought BHP for $68.97.
Bought Sept $140 puts on POT for $3.10.

Sold EBIX, ORCL, AFSI

Today I sold EBIX for $17.57, ORCL for $22.64, and AFSI for $13.86. AFSI was sold on valuation; I'll buy again if it goes lower. EBIX was sold for a 10% loss; I think the current price increase (due to a great earnings report) will recede. I'll look to pick it up again at a lower price. ORCL was sold for a gain; I sold it due to management reliability concerns.

Bought PG, Sold INTC puts

Filled the remainder of my targeted 5% position in PG for $59.78.

Sold INTC Sept $21 puts for $0.97.

Bought FNF Calls

Bought FNF Dec 2010 $12.50 Calls for $1.64

MDT, KCI, LNN, INTC options

Bought MDT Jan 2012 $35 strike calls for $6.60
Bought KCI Jan 2012 $30 strike calls for $10.50
Sold LNN Dec 2010 $30 strike puts $2.10.

The July INTC puts I wrote will expire unexercised this weekend.

Bought BRS calls, bought QQQQ puts

July 1st, I bought BRS Dec 2010 $30 calls for $3.00 per share.

Today, I bought Sept 2010 $43 puts on QQQQ (the Nasdaq long index) for $2 per share. I happen to own a lot of tech right now, so this is insurance. Most of that tech is owned in the form of 2012 calls, so there is relatively little capital at risk (versus owning the stock outright). The Nasdaq puts would cover loss of the option premiums. In the best of all possible worlds, the Nasdaq would decline by September, but recover (along with my individual tech stocks) by 2012. By September I would exercise my puts, covering the loss of option premiums, and in 2012 I'd exercise my calls, getting the techs essentially for free.

Worst case, the Nasdaq rallies through September (leaving my puts worthless) then declines through 2012 (taking my tech stocks with it, and leaving the calls worthless) and I lose the premiums paid for both sets of options.

Closed INTC calls

Bought-to-close my July INTC calls for $0.15 each. I wrote these calls for $0.97 each. I made 84% of the potential profit [ 1.00 - (0.15/0.97) = 0.845 ]. With 16 days until expiration, who knows what could happen? I closed early to bank the profit.

Bought HNR calls

I bought December 2010 $5 calls on HNR for $3.40 per share. This is a small, speculative position.

Closed SPXU calls

At the close of trading today, I sold-to-close my SPXU calls for $3.50 per share. I paid $2.65 per share; a successful transaction.

Bought SPXU calls

At the close of trading today, I bought $33 July calls on SPXU for $2.65 per share.

In and out of SDS

I was in and out of SDS today for a small (1%) profit.

Bought CCJ calls

Bought Jan 22 2011 $20 Calls on CCJ for $4.50 per share.

My June $108 SPY puts will expire unexercised.

SPXU, FPL, SPY calls

Yesterday I was in and out of SPXU, with a 1.4% loss--ouch. I sold FPL for $50.27. I also closed my June $12.50 GTI puts for $0.05.

Today I sold my SPY June $107 calls for $3.00.

Sold SPXU

Sold SPXU for $37.05.

SPXU, SPY straddle

Ahead of the Beige Book release:

Bought SPXY (S&P 500 3x short), for $35.80.
Bought a June straddle on SPY (bought June $107 calls @ $2.23, bought an equal number June $108 puts @ $2.42).

One buys straddles when one anticipates a large move in a stock or index, but doesn't know in what direction.

Sold AAPL puts

Sold the AAPL puts I just bought for $6.36, a nice little gain. Nothing earth-shattering at the WWDC event, just good business. A nice little profit on the puts, though.

Bought AAPL puts

About 5 minutes before the WWDC speech is scheduled to start, I've bought enough AAPL puts to cover the calls I currently own. The reason is, that even though I don't own AAPL outright, the calls make up a significant enough portion of my portfolio (about 5%) that I want to be covered. I bought June $250 puts for $5.20 each. I'll probably sell them later today.

Sold BP calls, RIG calls

I sold my June BP calls for $1.00 and my 2012 RIG calls for $12.00. Ouch.

Sold newly put GSK shares

I sold the GSK shares I was put for $34.10 (they cost me $33.50; the $35 strike minus the $1.50 premium). I made the option trade because it was an unusually good option premium for such a short time frame (four days, from May 20th to May 24th).

I sold the shares because I already have sufficient exposure via 2012 $40 strike calls.

GTI, GSK, INTC, NE, SDS, PCL, MELA, BP, KCI, RIG

Sold GTI $12.5 strike June puts @ $0.35.
Sold GSK $35 strike May puts @ $1.50. Was assigned shares.
Sold INTC $20 strike July puts @ $1.04
Bought NE $30 strike Jan 2012 calls @ $7.60
Hedged: Bought SDS @ $35.44; sold same day for $34.79
Bought PCL for $33.38. Sold for $35.12 a few days later.
Sold-to-close MELA calls for $2.75, on a 30% stock price pop. I may repurchase longer-dated calls later, cheaper.
Bought BP $44 strike June calls for $2.74.
Sold KCI @ $41.27. I may buy LEAPS on the stock later.
Bought RIG $50 strike Jan 2012 calls @ $15.20

Sold GTI, Sold GSK

I sold GTI for $16.59 and GSK for $35.42. I'd buy GTI back at a lower price. I sold GSK because I just bought 2012 calls on the stock, which gives me as much exposure to it as I want right now.

Closed MAXY calls

I sold-to-close my May calls on MAXY for $1.40 per share. The Codexis IPO didn't boost the price of the stock as I'd hoped.

MDT, LNN, PG, AAPL, GOOG, GSK, SPY

My goodness, what a week!

On the 28th I closed my outstanding puts on MDT and LNN, for $2.40 and $1.75, respectively.

On the 4th, I bought PG outright for $62 per share. I also bought 2012 calls on AAPL ($54.50 per share, strike @ $260) and GOOG ($91 per share, strike @ $510).

On the 5th, I bought GSK 2012 $40 strike calls for $2.80.

On the 7th, I bought AAPL 2012 $230 strike calls for $58.00. I also sold my GOOG stock (not the calls) because I believe my GOOG calls give me enough exposure to that stock.

Finally, I bought May 22 2010 $105 strike puts on SPY for $1.65. With just two weeks until expiration, that's a pure spec position. After the bizarro world action of the past week, I want a hedge.

Sold BR puts

I sold $22.50 strike Sept 2010 puts on BR. My premium was $1.25 per share.

So, my premium was $1.25 per share, with $22.50 put aside to secure the put. That gives me a 5.55% return on the cash set aside. The cash will be unavailable until September, which is 4.8 months away. So my return is 5.55%/4.8 months or 1.16% per month.

I may buy calls on BR later. Unfortunately, LEAPs (which I prefer to buy in ordinary circumstances) are unavailable for this stock.

Bought FPL

Put 5% of my portfolio in FPL at $49.50. I'm buying now in anticipation of the quarterly numbers. I waffled for awhile between buying LEAPs on the stock, trying to get it with puts, or buying it outright. The dividend (around 4%) tipped the scale.

Bought ROIC, Sold LNN puts

I put 0.4% of my portfolio in the optimistically acronymed ROIC at $10.25.

I also sold September $35 strike puts on LNN for $2.25 each. If the shares are put to me, I will have approximately 5% of my portfolio in LNN, at a net buy price of $32.75.

Bought MAXY, MAXY calls

Today I put just 0.1% of my portfolio in MAXY, at $6.54 per share. I also bought five $5 strike May calls on MAXY, for $1.85 per contract. MAXY is currently at $6.53 per share. This is a speculative trade.

Bought DENN, SNS; Closed puts on TUP, INTC

Bought DENN at $3.395
Bought SNS at $386.48
Closed July $40 puts on TUP for $0.60
Closed July $19 puts on INTC for $0.36

Mar 2010 portfolio allocations

I currently have 35% of my portfolio in investable cash, 40% in stocks, 13% in cash secured puts, and 12% in calls which I own.

Closed KRE puts

Closed the puts I wrote on KRE for $0.15. I'll look at writing more puts on this ETF later, to pick up shares cheaply and to offset the cost of the 2011 calls I bought.

Sold FLS

Sold FLS for $107.50, as it was nearing fair value. My profit on this position was effectively decreased, since I chose to buy back calls I'd written on it.

I originally bought FLS for $70, via puts (which paid $5.90) and wrote calls (which paid $4.20). Then I bought back the calls for $25 (ow). Now, I've sold for $107.50. My profit is:

$107.50 + $5.90 + $4.20 - $70 - $25 = $22.60 per share.

That's 32% of the original purchase price. Still, if I had bought FLS outright at $70, and had not written calls at all, my return would have been over 50%. Further, if I had let the calls be exercised, instead of buying them back, I would have made a 29% profit. Was the extra 3% worth the effort? If I was a professional money manager, competing with other professional money managers, sure. Since I'm a "hobbyist" I'm concerned with absolute rather than relative returns, and I think it wasn't worth the trouble.

Sold RIG

Sold RIG for $84.30. RIG missed the consensus earnings estimate in its last quarterly report, its second miss in the past twelve months. I'm happy to get out of it now at a slight (very slight) profit. I'll reevaluate it at leisure. I'll look for revenue growth before I buy again.

Sold WAT

Sold WAT for $63.545. I still like the stock, and may buy it again (perhaps via puts). I sold it because it was nearing fair value, and I'm looking for better, undervalued investment opportunities.

Synthetic long on KRE

I started a modified synthetic long on KRE.

I bought Jan 2011 $24 calls for $2.55, and sold an equal number of Mar 2010 $25 puts for $0.80.

The purpose of the March puts is to help offset the cost of buying the calls. If the puts aren't exercised, I may write more to absorb more of the buy price. Each leg of this trade would, if exercised, give me half of my target position in this ETF.

Closed puts written on KCI

I closed the March $35 puts I wrote on KCI, for $0.23 per share.

Feb 2010 options expiration

The puts I wrote on PCL expired without being exercised.

The puts I bought on ANF expired OTM, for a 100% cash loss; ouch. I still own May $34 puts on ANF.

Wrote TUP puts

I wrote July $40 puts on TUP for $2.00 per share. With approximately 5 months to expiration, my potential return is:

(premium)/(strike price) = $2.00/$40.00 = 5.0 %

This is the return I get on the cash ($40 per share, or $4,000 per contract) I've set aside to secure the puts. I never write puts on margin.

This comes out to about a 1% return per month, which is the minimum return I require for taking a risk of this nature.

AAPL iPad profit margins

http://www.theregister.co.uk/2010/02/11/ipad_breakdown/

This from The Register; a breakdown of the profit-after-materials-cost for the iPad by a market research firm. Of course, this doesn't include R&D, advertising, and so forth.

"The research firm said the total cost of materials and manufacture for Apple's big iPhone ranged from $229.35 for the 3G-less, 16GB version, which sells for $499 to $346.5 for the top of the range 3G 64GB version, which carries a $829 price tag.

While the top end product produces a profit of $482.85, it is the 32GB 3G version which iSuppli says will produce the biggest chunk of profit. That's because while it sells at $729, its manufacturing cost is a mere $287.15, less than 50 bucks more than the bottom end iPad, producing a bumper profit of $441.85."

Bought GILD calls

Bought Jan2012 $45 calls on GILD for $8.50/share. If exercised, GILD will be 3% of my portfolio. I may turn this into a synthetic long by writing puts later.

GSK puts exercised early

The February puts I wrote on GSK were exercised early; I now own GSK at $42.50. The stock is currently trading for $37 and change.

Wrote puts on PCL

Wrote Feb $35 puts on PCL for $0.60 each. This is a shorter option period than I normally use, but I would be happy to own this stock, and the option return was good; 1.7% in 12 days, or about 4.3% per month, or about 51.4% annualized.

PCL sell order triggered.

A sell order on my PCL stock was triggered. I sold at $36.01, for a 20% gain.

AAPL sell order triggered

A sell order on my AAPL stock was triggered. I sold at $192.00, for a 5% loss. I still own 2012 calls on AAPL.

Sold LNN

Sold LNN for $37.99. I had a 18.6% profit on the position, and while it may climb higher, it's volatile (See the June, July, August, and October 2009 posts) and nearing fair value.

Bought RIG, again

I put 3% of my portfolio in RIG at $83.75.

Bought more ANF puts

Today I bought May $34 puts on ANF for $3.25 per share. I still have my $34 February puts, which are a loss at this point. I bought the May puts cheaply on a 7% jump in the stock price following a positive monthly sales report which I believe to be misleading. When/if the share price drops again, I may close my February puts, rolling the remaining value into the May puts. However, with option expiration in two weeks (on the 20th) and a possible catalyst in ANF's earnings report (on the 16th) it may not be worth it.

Here's the sales report I mentioned:

http://www.prnewswire.com/news-releases/abercrombie--fitch-reports-january-sales-results-83534537.html

Note, in the 5th paragraph "At the beginning of the fiscal month, the value of complimentary gift cards issued but not redeemed was approximately $22 million, substantially all of which has been recognized in sales in January." (emphasis mine). Eleven words yet O! how they catch the heart.

Set up a strangle on INTC

I set up a July 2010 strangle on INTC, a stock in which I did not previously hold a position.

First, I bought INTC for $19.97 per share. Then, I took two actions; I wrote covered calls against my newly purchased shares, and I wrote puts to purchase more. The calls have a strike price of $21, and the puts have a strike of $19. That is, by July I will be obliged to sell my new shares for $21, or buy more at $19. I was paid $0.97 for the calls and $1.22 for the puts. The total option premium is $2.19 per share, and remember that I keep that no matter what the outcome of the options at expiration. The possible outcomes are as follows:

IF:
In July, INTC is trading above $21 per share.
I will sell my INTC for $21 per share.
My gain will be:
(sale price - purchase price + option premium) = $21 - 19.97 + 2.19 = $3.22 per share.
Profit = $3.22 per share.

IF:
In July, INTC is trading somewhere between $21 and $19 per share:
I will not be obliged to sell my INTC.
I will not be obliged to buy more INTC.
I will keep the option premium of $2.19 per share.
Profit = $2.19 per share.

IF:
In July, INTC is below $19 per share.
I will not be obliged to sell my INTC.
I will buy more INTC at $19 per share.
Profit = $2.19 per share.

There are two risks involved here; risk to capital, and risk to profit. In the former, my risk is that INTC will have dropped substantially in value by the expiration date. I would be obliged to buy it at $19 even if it was trading for $0.19. Therefore it's important to consider the quality of the underlying security. In this case, I believe INTC is a stable, financially strong company which I would be pleased to buy at $19. I believe the underlying value is there. I would not make this trade if I had doubts about the financial strength or management integrity of this company.

The latter risk, risk to profit, comes into play if my covered calls are exercised. If INTC is trading at $100 per share at expiration, I'm still obliged to sell at $19. In essence, I'm trading all my profit above $19 for the $1.22 premium payment (for that leg). Therefore, I wouldn't make this trade on a stock like AAPL, which is known for it's sharp and unpredictable changes in price. For this trade, I'd also avoid any stock which has an upcoming event which could affect the price, such as FDA approval of a drug.

Bought GOOG calls

I bought one 2012 call on GOOG. The strike is $530, and I paid $88 per share.

Sold HP

I sold my stock position in HP for $41.87. I still own the 2012 $40 calls.

Bought PWR calls

Bought Jan2011 $12.50 calls on PWR for $6.46 per share. If exercised, PWR will be 5% of my portfolio. PWR is currently trading at $18.20 per share.

Bought calls on AAPL, HP

Today I bought LEAP calls on my two largest positions. I bought 2012 LEAP calls on HP at a $40 strike for $12.70 per share and a 2012 LEAP call on AAPL with a $180 strike for $56.50 per share.

Buying the calls means I own the right to buy the stocks at the strike price any time between now and January 2012. It's a good way to regain liquidity without sacrificing too much upside potential. I can now sell my full positions of HP and AAPL if I need the cash to buy cheap stocks, but I will still profit if HP and AAPL continue to rise.

Sold RIG and ADBE

Sold my full position in RIG for $88.07. Sold my full position in ADBE for $35.52. I'll consider buying both back at lower prices.

Bought KCI, GTI

I put 5% of my portfolio in KCI at $41, and another 5% in GTI at $14.

NS RIG puts exercised

The NS RIG puts I sold were exercised; here are the results:

The option package was "$2314.38 cash in lieu of shares, 47 shares of RIG." I put up $8000 per contract to secure the position. The contract was exercised.

I received:
$2,314.38 cash
47 shares of RIG (current market value, at $91.85/share, is $4,316.95)
$1705 option premium($17.05 per share, 100 shares per contract)

I paid:
$8,000 cash

So, my net gain is Cash + RIG + Premium
or $2,314.38 + $4,316.95 + $1705 = $8336.33

I paid $8,000 to get $8,336.33, approximately a 4.2% return in one month. If I could do that all the time, I'd write a book.

However, I repeat that NS (Non-Standard, also called "exotic") options are not for beginners. They can be very tricky, and you can lose a lot of money very quickly.

An unexpected result of the transaction is that my average buy price for RIG is now $126.28--my broker has a buy price of $8,000/47 shares, or $170.21 per share for my new shares. It will have no affect on my trading (or for tax purposes in my particular type of account) but it makes an ugly red mark in my portfolio. Let the record show that my effective buy price is ($8,000 - 2,314.38 - 1,705)/47 shares or $84.69 per share.

Bought back FLS calls

The FLS call I wrote was set to expire this month; instead, I bought it back for $25. Ouch.

To recap, I got FLS in July when shares were put to me at a $70 strike price. I was paid $5.90 for the puts. I wrote calls on the shares I was put, at an $80 strike. I was paid $4.20 a share for that part of the transaction. FLS performed far better than I expected, and now I want to keep the stock.

So here's the summary:

(purchase price) - (put premium) - (call premium) + (cost to close call) = effective buy price

or

$70 - $5.90 - $4.20 + $25 = $84.90 effective buy price.

The alternative would have been allow the call to expire and sell at $80:

$80 + $5.90 - $4.20 - $70 = $20.10 profit per share.

FLS is currently trading around $105, so if I sold my shares now, I'd get about $20.10 profit. Buying back the shares will be more profitable if FLS continues to increase in value. If FLS drops before I sell, then I would have been better off letting the contract expire.

Sold MDT puts

Sold May 45 MDT puts for $2.60 per share.

Sold FPL

I sold my FPL at $50, taking about a 5% loss on the position. I closed the position due to the company's decision to reduce capital expenditures after a rate hearing went against them. I may write puts to get the shares at a lower price.

Bought GOOG

Bought a 2% position in GOOG for $580.

SLV called away early

The calls I sold on my SLV shares were exercised today. The calls were part of an income producing strategy, rather than a core holding. I'll wait until SLV drops in value, then write puts for more income.

Bought MELA calls

Bought July 2010 $5 MELA calls for $6.00 per share. MELA is a micro-cap currently trading at $10.33. If I exercise the calls, MELA will be just 0.5% of my portfolio. This is a small position because of the risk involved; it will only gain value if MELA's flagship product gets FDA approval.

Bought more FPL, bought JNJ puts

Today I bought more FPL at $52.90. I already had 2% of my portfolio in this stock; this purchase brings my position to 5%. FPL is an electric utility company with two parts; one a regulated public utility and one an unregulated private energy producer. FPL has not participated in the broader market rally, up only 12% from it's March 2009 lows.

I also bought January 2012 $50 calls on JNJ for $14.70. Since I bought the calls, this means I have the right to buy JNJ at $50 per share any time between now and 2012. JNJ is currently trading at $64.

If I exercise these calls, I'll be buying JNJ for $50 + $14.70 = $64.70. The calls will increase in value if JNJ rises. I'll break even if JNJ is at $64.70 at the expiration date. If JNJ is below that price, my loss on the position will increase until JNJ drops to $50, for a maximum loss of $14.70 per share (i.e., the calls expire worthless). If JNJ is above $64.70 per share, I make a profit. There is no cap to the profit on this strategy. Since JNJ could theoretically increase to infinity, my profit is theoretically infinite, too. In practice, JNJ's record high is around $70 and I'd be surprised (if delighted) to see that height again. In that best case scenario, my profit would be around $15 per share ($70 - 50 - $14.70) if I exercised the contracts.

I could also resell the contracts, later. The price would depend on the time remaining until expiration, and JNJ's price at that time.