Tuesday, March 6, 2012

Recent Transaction

Yesterday I bought back the $42 Hal 07202012 Call option that I sold in early February. When I originally sold the option I was hoping that it would just expire since I didn't want to have to deal with the extra taxes due to the shares being bought through the ESPP. I sold the call for $1.60 with a $8.03 total commission so that netted me $151.97 or a 3.62% yield for the term of the option. I was able to buy back the option to close out the position for $0.76 yesterday with a total commission of $7.97 which cost me a total of $83.97. The 2 trades combined netted me a total of $68.00 or 1.62% option yield over 32 days. That equates to a 20.12% CAGR. Since I was able to get almost half of the option yield in only 20% of the time I thought it was a pretty solid move to lock in the gain and not have the risk of the shares being called away triggering a higher taxable event for my ESPP shares. Unfortunately the stock market decided that today it wanted to finally freak out about the global economic situation and I could've bought the call to close out the position for $0.62 which would have given me a much better gain. Oh well, pigs get slaughtered right? If the shares were not part of the ESPP then I would have let the option go to the end most likely although I feel that this was a good move regardless.

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