Wednesday, 12 November 2014

Options Trade - Ensco


Today I sold a put option in ESV.

Sold 1 ESV Put Jan 17 '15 $37 Put @ 1.56 ($11.20 commission + $0.01 SEC fee)

Days Held (sell date to expiry): 66
Net Premium: $144.79

Annualized Return = ($144.79 / ($3,700 - $144.79)) * 365/66 = 22.5%

The most likely outcomes of this trade are:
  1. Shares are trading above $37 at expiration. I will get to keep the $144.79 in net premiums.
  2. ESV is trading below $37 at or before expiration and shares are assigned. I will receive 100 shares of ESV at a net cost of $35.56/share.

In response to a comment received, I calculated my annualized return on my other options too:

SNC-Lavalin

Sold 1 SNC Put Jun 19 '15 $42 @ 2.95 ($11.20 commission)

Days Held (sell date to expiry): 224
Net Premium: $283.80

Annualized Return = ($283.20 / ($4,200 - $283.20)) * 365/224 = 11.8%

General Mills

Sold 1 GIS Put Apr 17 '15 $47.50 @ 1.08 ($11.20 commission + $0.01 SEC fee)

Days Held (sell date to expiry): 158
Net Premium: $96.79

Annualized Return = ($96.79 / ($4,750 - $96.79)) * 365/158 = 4.8%

2 comments:

  1. ADY,

    That seems like a pretty good move with ESV. I think a bottom is forming here around the $38 to $40 range. I need to average down some more as my cost basis is currently around $48.

    Good luck you options!

    MDP

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    Replies
    1. I wouldn't mind buying more ESV, but because I have so much, and my cost per share is quite high, I'd like to get a really good bargan on the share price. I'm thinking that if my put expires worthless in January, I might sell another one on ESV.

      And congrats on rapidly building a pretty big dividend income stream. I don't comment much on people's blogs, but I read them regularly.

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