Looking at trade confirmations, this is the latest play on the "trade portion" of my holdings. The amount of cash, number of shares/options are adjusted for ease of analysis. I will use this as a starting point for the study. Commissions are not factored in, nor tax consequences.
July 2001: Have cash $ 110,000.
bought on 7/18/01: 1,000 QCOM at $62.25 use them as collateral for CC. Remaining cash $ 47,750
Sold on 7/24/01 : 10 puts QCOM aug60 at 5.70 collect $ 5,700 (QCOM at $ 58)
Sold on 8/2/01 : 10 calls QCOM aug65 at 4.20 collect $ 4,200. (QCOM at $ 68)
Saturday August 18, 2001. Option expires worthless, got to keep the premium. Stock closed at 61.56.
The holdings:
1,000 of qualcomm at $ 61.56 = $ 61,560
cash: $ 47,750 + $ 5,700 + $ 4,200 = $ 57,650
Total holdings: $ 119,210, a gain of $ 9,210 or equal 8.37% for almost a month.
That seems great as far as numbers go, but look at the historical prices: I was lucky to sell put on a day when the stock closed the low for the period, and sell call on the day that the stock closed at the high. Maybe that count about half of the gain.
The objective is to see whether Covered Strangle would be the preferred strategy. In the next posts I will try to make comparison with other approach: what if on those trading days I did differently for the past stock behavior. |
