Tuesday, 18 November 2014

Options Trade - BHP Billiton


Today I sold a put option in BBL.

Sold 1 BBL Put Jun 19 '15 $50 Put @ 3.00 ($11.20 commission + $0.01 SEC fee)

Days Held (sell date to expiry): 213
Net Premium: $288.79

Annualized Return = ($288.79 / ($5,000 - $288.79)) * 365/213 = 10.5%

The most likely outcomes of this trade are:
  1. Shares are trading above $50 at expiration. I will get to keep $288.79 in net premiums.
  2. BBL is trading below $50 at or before expiration and shares are assigned. I will receive 100 shares of BBL at a net cost of $47.11/share.

I recently received a dividend from ACN and was surprised that a withholding tax was applied. The company is headquartered in Ireland, and as such, shareholders in relevant territories (Canada being one of them) do not pay DWT. After some reaserch, it appears that I must fillout a form and return it to my broker. 

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