rob,
this is an income strategy. all short call premiums is the income generated from the leap calls. the monies needed to buy itm short calls is factored into the calculation of the leap calls. currently the leap calls are greater than the adjusted cost basis. the 2.18 is my income the 6.05 is added to the original leap cost basis. i know know how i lost money when i collected over 3900 in short call premiums and my leap calls are now greater in value than the adjusted cost basis? drjoe
--- In ConservativeOptionS
>
> Dr. J. What prompted your decision to buy back the short apr 114 calls at 6.05 after selling it for 2.18? And then rolling them up to the apr 120's? You also lost money on the closing of those 120's. So you lost money on all of the shorts, but only sold one of the leaps to finance the loss. I'm kinda in the dark here.
>
> RFH
>
> --- In ConservativeOptionS
> >
> > 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)
> >
> > net investment = sum (bto long calls minus stc long calls plus btc itm short calls)
> > = (36315 - 4179 + 5460 + 858) = 38454
> >
> > with 9 leap contracts remaining adjusted cost basis is 38454/900 = 42.73
> > current value of leap is 43.11
> >
> > 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%)
> >
> > spy last 38 days up 5.94% (59.4% annualized)
> >
> > 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
> >
> > (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
> >
> > drjoe
> >
>
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