With the continued market weakness on Wednesday and Thursday this past week, I closed out the $39 and $41 call options that I had open on some of my HAL shares. I recent devised a strategy to try and maximize income and diversify out of my employer's stock. I had originally sold both calls on April 9th so this was a much shorter holding period that I'd have liked.
I was a little impatient with selling the calls originally and should have spread them out a bit more. With the market's taking a drop this week and oil stocks leading the way, the call options became cheaper so I bought to close two of my call options in hopes of re-selling it at a later date to increase the premium and my sale price should it be exercised.
On Wednesday, I bought to close the $39 call for $1.67 and if you remember, I had received $211.26 in premium when I sold it. My net profit on this trade was $35.88 which ended up being a 0.92% return in just over a week, so it was a nice 42.00% annualized return.
On Thursday, I had actually forgotten about my open buy to close order so I was a bit surprised to see it in my executed orders. To close the position it cost my $0.86, $86, which after commission and fees netted me a $29.03 profit on this trade after subtracting this from the $123.01 I had received upon the sale. This represented a 0.71% return which is annualized to a 28.73% rate.
Normally I'd look to close the call for a higher dollar return and a longer holding period, but almost 1% gains for a week of the trades being open is fine by me. As I mentioned earlier, I was a little impatient when selling the calls, so I was glad the markets gave me a chance to unwind the calls. I'll be looking to re-sell some calls once the markets take their next move higher since call premiums will be juiced.
So far in 2013 I've received $470.78 in option premium.
I've updated my Portfolio and Option Summary pages to reflect these changes.