Sunday, January 23, 2011

Positions - Alcoa (AA) Jan 11 Options Expiration

On Friday's option expiration day Alcoa closed at $15.79.

The first lot of the position was called away at $15. This lot was acquired prior to the initiation of this blog at around $10 share. A gain of $5.00. In addition the lot had covered calls written against it a few time for a total of $.44, and made $.06 in dividends. That is a total gain of $5.50 or 55%. Obviously a great return on this lot

The closing price of $15.79 also means the $16 puts sold for $.20 about 2 weeks ago were assigned. So we became long one lot of AA now at an entry price of $15.80 this weekend. In a stroke of luck (....wait... I meant brilliance) AA spiked up to $16.50 on Monday. Given the opportunity to make 4% in one day...I booked it now and asked question later. Sold at $16.48

No AA in the portfolio anymore. Some think AA has room to run. For example , see Street Authority's article below for a good summary of the bull case. However, I need to see the stock consolidate some, and currently would not consider an entry price above $15. The stock is pulling back today. Vol continues to be high on AA options. If the stock continues to pull back towards $15 and market vol rises I would consider selling $15 puts

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