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.
