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Friday, October 29, 2010

MCD Covered Call Timeline

10/29/2010

Buy 100 shares of McDonald's (MCD) @ $77.78
Sell to open one Jan 2011 $80 call @ $1.14

Net profit: $114


Reasons for this trade:

- P/E = 17.10
- good earnings released on 10/21/2010
- Beta = 0.60
- 50 EMA and 200 EMA trending up
- $0.61/share dividend payable on 12/15/2010 (ex-div 11/29/2010)

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12/15/2010

Dividend: $0.61/share

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1/21/2011

Jan 2011 call expired. No assignment.

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2/14/2011

Sell to open June 2011 $80 call @ $0.97

Net profit: $97

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3/15/2011

Dividend: $0.61/share

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5/18/2011

Buy to close June 2011 $80 call @ $1.61
Sell to open Dec 2011 $80 call @ $4.00

This is a "spread" trade, one commission

Net profit: $239

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This options trader teaches at Lilia's Investing Academy. For more details, click here.

Wednesday, October 27, 2010

Gold Covered Call

Sold a gold covered call today. Made $327.00.
Premium: $3.27 (sell to open)

GLD was purchased at $129.24/share.

On Dec. 1, 2010, I "rolled" this Dec 2010 $130 call into a Jan 2011 $129 call.
This order was placed as a "spread".

Premium: $7.85 (sell to open)
Premium: $5.80 (buy to close)

The math:

($3.27 + $7.85) - ($5.80) = Net $5.32 per share


Tuesday, October 5, 2010

Sold Silver Covered Call

I recently sold two covered calls for Silver. I received $132 (gross).

Today (11 am, 10/5/2010), silver was up 3.48%, but the silver call option was up 53.85% !!!

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UPDATE (expiration Friday, 11/19/2010):

SLV closed at $26.74 today. The call option is in-the-money => automatic assignment.

The call option closed at $4.70 today.

IMPORTANT NOTE:

This call option traded as high as $6.70 (11/9/2010) during its life!!!!!!!!!!

Remember......the BUYER of this call option paid only 66 cents per contract (10/4/2010).

Just one month later (on 11/9/2010), this same contract was worth $6.70!!!!! That is a return of 915% in four weeks !!!!!!!!!!!!!!!!!!!!

Another way to look at this:

An initial investment of only $660 (10 contracts) was worth $6700 on 11/9 !!!!!!!!

This is the reason I love options! :-)

(you can learn all about options trading in my Level 4 class.....see www.moneyandlilia.blogspot.com for details)