Tuesday, September 2, 2008

Freddie Mac (FRE)

Buy 100 shares at 5.18, sell September 5 call at 0.90.
Initial Investment = 518
Option Investment Value = 590
Option Income Yield = 13.9
Option Total Profit = 500 - 518 + 90
= 72
Strike Price Value = 500
Investment Profit = -18
Option Income = 90
Expected Price Value = 600
Difference from Option Strike Price and Expected Price = -100
You sold the shares at the option strike price of 5. The market price was 6. You sold out early and missed 100 in stock profit. With covered call profits, the net result is -10.
Covered Call Calculator

Wednesday, August 27, 2008

Freddie Mac (FRE)

Current price $4.75, September Call at 5 is worth $0.80 per share.
Initial Investment = 475
Option Investment Value = 580
Option Income Yield = 22.1
Option Total Profit = 500 - 475 + 80
= 105
Strike Price Value = 500
Investment Profit = 25
Option Income = 80

Saturday, August 23, 2008

Tata Motors (TTM)

Buy 100 shares at 9.30. Sell the September 10 call for 0.35 per share. If exercised, will return $105 or an 11.3% return in one month.
Initial Investment = 930
Option Investment Value = 1035
Option Income Yield = 11.3
Option Total Profit = 1000 - 930 + 35
= 105
Strike Price Value = 1000
Investment Profit = 70
Option Income = 35
Expected Price Value = 1000
Covered Call Calculator

Friday, August 8, 2008

Wells Fargo

WFC 100 shares at 30.17. Sell August 30 Call at 30.

Initial Investment = 3017
Option Investment Value = 3090
Option Income Yield = 2.4
Option Total Profit = 3000 - 3017 + 90
= 73
Strike Price Value = 3000
Investment Profit = -17
Option Income = 90
Expected Price Value = 3017
Difference from Option Strike Price and Expected Price = -17
You sold the shares at the option strike price of 30. The market price was 30.17. You sold out early and missed 17 in stock profit. With covered call profits, the net result is 73.
Dividend Return = 136
Total Profit = 119
Total Percent Return = 3.9

Bank of America

BAC 100 shares at 32.25, sell August call at 32.50 for 0.85. The stock also has a 7.7% dividend yield.
Initial Investment = 3225
Option Investment Value = 3335
Option Income Yield = 3.4
Option Total Profit = 3250 - 3225 + 85
= 110
Strike Price Value = 3250
Investment Profit = 25
Option Income = 85
Expected Price Value = 3225
Difference from Option Strike Price and Expected Price = 25
Since the expected price is less than the option strike price, you kept the shares at 32.25. The profit from selling a covered call was 85. The current stock gain or loss is 0. With covered call profits, the net result is 85.