Option Trading Articles: [ConservativeOptionStrategies] Re: spy dls update

mike,
the 5460 needed to cover the short calls is factored into calculation of net investment. drjoe
--- In ConservativeOptionStrategies@yahoogroups.com, mike xue <michaelxue88@...> wrote:
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> Hi Dr. Joe,
> Â
> Thanks for the summary. One Question: I don't know if the net income in your example is correct because you used $5046.05 to cover April 10 114 call. If you just use premium from short call to calculate return, I could sell more calls to get it. But I would need to sell more leap tp cover. I think that a more appropriate way to compare DLS portfolio and B&H fortfolio is to compare their total values.
> Â
> Thanks,
> Â
> MikeÂ Â
>
> --- On Fri, 4/16/10, joe & leigh <gass20@...> wrote:
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> From: joe & leigh <gass20@...>
> Subject: [ConservativeOptionStrategies] spy dls update
> To: ConservativeOptionStrategies@yahoogroups.com
> Date: Friday, April 16, 2010, 4:19 AM
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>
> Â
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> Account Activity
> Date Action Qty Symbol/Description Price Net Amount
> 04/15/2010 Buy To Close 7 SPY Apr10 120 Call $1.21 ($857.58)
> 04/15/2010 Sell To Open 7 SPY May10 121 Call $2.13 $1,480.39
> 04/12/2010 Sell To Open 7 SPY Apr10 120 Call $0.77 $523.96
> 04/12/2010 Buy To Close 9 SPY Apr10 114 Call $6.05 ($5,460.05)
> 04/12/2010 Sell To Close 1 SPY Dec12 80 Call $41.94 $4,178.97
> 03/09/2010 Sell To Open 9 SPY Apr10 114 Call $2.18 $1,946.92
> 03/09/2010 Buy To Open 10 SPY Dec12 80 Call $36.30 ($36,315.11)
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> net investment = sum (bto long calls minus stc long calls plus btc itm short calls)
> = (36315 - 4179 + 5460 + 858) = 38454
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> with 9 leap contracts remaining adjusted cost basis is 38454/900 = 42.73
> current value of leap is 43.11
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> net income = sum of all short call premiums received
> = 1947 + 524 + 1480 = 3951
>
> percent return = 3951/38454 = 10.27% (38 days in trade - annualized = 98.7%)
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> spy last 38 days up 5.94% (59.4% annualized)
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> if one had buy and hold strategy and entered on 3/9/2010 at 114.5 and 1000 shares would have at risk 114,500 dollars. using dls = 10 contracts at risk was 36,315
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> (114,500 - 36315 = 78,185 cash set aside in fixed income NOT leveraged)
> use this cash to roll out leaps when current leap has about 12 months to expiration and also add more leaps during market corrections
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> drjoe
>