Rolled Emerging Market (EEM) Covered Calls Out and Down

The Index Covered Call Trading Plan  (aka: ICC) is CCI's approach for managing a position of index ETFs and related covered calls.  The most recent trade against this plan is described below.  A reader can find details about the rational and management of the trades at the ICC trading plan tab on CCI's home page.

UNDERLYING ETF: EEM   
DESCRIPTION: iShares Emerging Market Shares   

TRANSACTION TYPE:    Emerging market stocks have fallen recently and CCI harvested some option premium and re-establish the covered call position as described below.

TRANSACTION DATE: Mon 12/23/13 

 

Action: Buy to Close

Exp. Date: Jan. 3,  2013

Strike: $42

Price: $.07

 

Action: Sell to Open  

Exp. Date: Jan. 10, 2013 (rolled out one week further) 

Strike: $41.50

Price: $.28

Net Credit: $.20 after commissions

SPY Covered Call Rolled Out

The Index Covered Call Trading Plan  (aka: ICC) is CCI's approach for managing a position of index ETFs and related covered calls.  The most recent trade against this plan is described below.  A reader can find details about the rational and management of the trades at the ICC trading plan tab on CCI's home page. 

UNDERLYING ETF: SPY 

 

 DESCRIPTION: SPDR S&P500 

 

TRANSACTION DESC:  With only two days left until expiration, CCI rolled the SPY covered call out until January as described below 

 

Action: Buy to Close

Exp. Date: Dec. 21, 2013

Strike: $181

Price: $.28

 

 Action: Sell to Open  

Exp. Date: Jan, 18 2014

Strike: $181

Price: $1.20

 

Net Credit after commissions: $.92

Rolled C Covered Call

As discussed here CCI has a long position in the financial sector etf (xlf) via the Jan 15 $10 Call, that has usually been hedged via a shorter duration short call in Citigroup (C).

With only a few days until expiration, CCI rolled the short call in Citigroup as a hedge against the long. leveraged position in XLF held in the portfolio. Specifically,  CCI

• bought back the Dec  21 $52.50 call at $.08, harvesting $.36 in option premium per contract
• sold the Jan 10, $53 call at $.44/contract.  

Note: C is scheduled to report earnings on Jan 13.  This strike date was selected to avoid the volatility of that event.  This position will likely be rolled out to a strike well beyond the earnings date (feb?) if an opportunity to harvest option premium presents itself in the next few weeks


Since inception on Jan 8, 2013 the performance of various potential holdings as of the time of this trade are shown below:

• The XLF etf  has been relatively flat lately but continues to hold onto its excellent performance since January - up 24.7%! That is comprised of 23.4% unrealized  cap gain, and 1.3% in dividends.
• The leverage obtained by instead simply holding the Jan 15 $10 call has generated and unrealized, leveraged, capital gain of 58.0%.  (leverage is great when it works!!!)
• The leveraged, long/short strategy defined in this thread is up 53.8%. That is comprised of 39.5% in unrealized leveraged capital gains, 14.3% in realized option premium.  

Rolling Small Cap (IWM) Covered Calls

The Index Covered Call Trading Plan  (aka: ICC) is CCI's approach for managing a position of index ETFs and related covered calls.  The most recent trade against this plan is described below.  A reader can find details about the rational and management of the trades at the ICC trading plan tab on CCI's home page. 

UNDERLYING ETF:  IWM

DESCRIPTION: iShares Russell 2000

 

TRANSACTION TYPE: Roll Out 

CCI  harvested some option premium and repositioned the IWM covered call position as described below.

 

TRANSACTION DATE: Dec. 13

Action: Buy to close

Exp. Date: Dec. 21,  2013

Strike: $113

Price: $0.21

 

Action: Sell to Open

Exp. Date: Dec. 27, 2013 (out one week)

Strike: $111

Price: $0.52

Net Credit/Contract: $0.31

Rolled Emerging Market (EEM) Covered Calls

 The Index Covered Call Trading Plan  (aka: ICC) is CCI's approach for managing a position of index ETFs and related covered calls.  The most recent trade against this plan is described below.  A reader can find details about the rational and management of the trades at the ICC trading plan tab on CCI's home page.

UNDERLYING ETF: EEM   
DESCRIPTION: iShares Emerging Market Shares  

TRANSACTION TYPE:    CCI harvested some option premium and re-establish the covered call position as described below.

TRANSACTION DATE: Wed 12/10/13 

 

Action: Buy to Close

Exp. Date: Dec,  13 2013

Strike: $42

Price: $.07

 

Action: Sell to Open  

Exp. Date: Jan. 3, 2013 (3 weeks out) 

Strike: $42

Price: $.38

Net Credit: $.31 after commissions

Rolled Small Cap Covered Call Position

The Index Covered Call Trading Plan  (aka: ICC) is CCI's approach for managing a position of index ETFs and related covered calls.  The most recent trade against this plan is described below.  A reader can find details about the rational and management of the trades at the ICC trading plan tab on CCI's home page. 

UNDERLYING ETF:  IWM

DESCRIPTION: iShares Russell 2000

 

TRANSACTION TYPE: Roll Out 

Small cap stocks puled back just enough for to allow CCI to harvest some option premium and reposition the IWM covered call position as described below.

 

TRANSACTION DATE: Dec. 10

Action: Buy to close

Exp. Date: Dec. 13,  2013

Strike: $113

Price: $0.17

 

Action: Sell to Open

Exp. Date: Dec. 21, 2013 (out one week)

Strike: $113

Price: $0.57

Net Credit Contract after commissions: $0.39

Keep on Rolling Emerging Market Covered Calls

The Index Covered Call Trading Plan  (aka: ICC) is CCI's approach for managing a position of index ETFs and related covered calls.  The most recent trade against this plan is described below.  A reader can find details about the rational and management of the trades at the ICC trading plan tab on CCI's home page. 

 UNDERLYING ETF: EEM

 DESCRIPTION: iShares Emerging Market Shares 
 

TRANSACTION TYPE:    CCI harvested some option premium and re-establish the covered call position as described below.

TRANSACTION DATE: Wed 12/4/13 

 

Action: Buy to Close

Exp. Date: Dec,  6 2013

Strike: $42

Price: $.14

 

Action: Sell to Open  

Exp. Date: Dec. 13, 2013 (one weeks out) 

Strike: $42

Price: $.33

Net Debit: $.18 after commissions

Pause in the Rise of Small Caps Provides an Opportunity to Reposition Covered Calls

The Index Covered Call Trading Plan  (aka: ICC) is CCI's approach for managing a position of index ETFs and related covered calls.  The most recent trade against this plan is described below.  A reader can find details about the rational and management of the trades at the ICC trading plan tab on CCI's home page. 

UNDERLYING ETF:  IWM

DESCRIPTION: iShares Russell 2000

 

TRANSACTION TYPE: Roll Out and Up

Small Cap stocks finally paused its upward climb today and CCI repositioned the IWM covered call position as described below.

 

TRANSACTION DATE: Dec. 2 

Action: Buy to close

Exp. Date: Dec. 6,  2013

Strike: $110

Price: $2.96

 

Action: Sell to Open

Exp. Date: Dec. 13, 2013 (out one week(

Strike: $113

Price: $1.09

Net Debit/Contract after commissions: $1.96 

Rolled EEM Calls.......Again

The Index Covered Call Trading Plan  (aka: ICC) is CCI's approach for managing a position of index ETFs and related covered calls.  The most recent trade against this plan is described below.  A reader can find details about the rational and management of the trades at the ICC trading plan tab on CCI's home page. 

 UNDERLYING ETF: EEM  

 DESCRIPTION: iShares Emerging Market Shares 
 

TRANSACTION TYPE:    CCI harvested some option premium and re-establish the covered call position as described below.

 

TRANSACTION DATE: Thur 11/25/13 

 

Action: Buy to Close

Exp. Date: Nov.  29, 2013

Strike: $42

Price: $.14

 

Action: Sell to Open  

Exp. Date: Dec. 6, 2013 (one weeks out) 

Strike: $42

Price: $.36

 

Net Debit: $.22 after commissions

Re-established Covered Call in Emerging Market ETF (EEM)

The Index Covered Call Trading Plan  (aka: ICC) is CCI's approach for managing a position of index ETFs and related covered calls.  The most recent trade against this plan is described below.  A reader can find details about the rational and management of the trades at the ICC trading plan tab on CCI's home page. 

 UNDERLYING ETF: EEM  

 DESCRIPTION: iShares Emerging Market Shares 
 

TRANSACTION TYPE:   The emerging market ETF (EEM) stopped its recent downward slide today, and CCI used that move to harvest option premium and re-establish the covered call position as described below.

 

TRANSACTION DATE: Thur 11/14/13 

 

Action: Buy to Close

Exp. Date: Nov.  16, 2013

Strike: $44

Price: $.01

 

Action: Sell to Open  

Exp. Date: Nov. 29, 2013 (two weeks out) 

Strike: $42

Price: $.25

 

Net Debit: $.23 after commissions

Re-establish Short Call in C

As discussed here CCI has a long position in the financial sector etf (xlf) via the Jan 15 $10 Call, that has usually been hedged via a shorter duration short call in Citigroup (C).

With financial stocks rising, CCI decided to re-establish a short call in Citigroup as a hedge against the long. leveraged position in XLF held in the portfolio. Specifically,  with C pushing through $50, CCI sold the Dec  21 $52.50 call at $.44

Since inception on Jan 8, the performance of various potential holdings as of the time of this trade are shown below:

• The XLF etf  continues its excellent performance up 23.2%! That is comprised of 21.9% unrealized  cap gain, and 1.3% in dividends.
• The leverage obtained by instead simply holding the Jan 15 $10 call has generated and unrealized, leveraged, capital gain of 53.7%.  (leverage is great when it works!!!)
• The leveraged, long/short strategy defined in this thread is up 49.7%. That is comprised of 36.6% in unrealized leveraged capital gains, 13.1% in realized option premium.  The short call position described in this post provides about a 4.7% hedge/option premium opportunity. 

Note: C reported earnings and they did not seem to push the stock higher. This reduces the volatility/risk of the short call. As the price of the option decays look for CCI to close or roll this position relatively soon.

Rolled Small Cap Covered Call Out & Down

The Index Covered Call Trading Plan  (aka: ICC) is CCI's approach for managing a position of index ETFs and related covered calls.  The most recent trade against this plan is described below.  A reader can find details about the rational and management of the trades at the ICC trading plan tab on CCI's home page. 

UNDERLYING ETF:  IWM

DESCRIPTION: iShares Russell 2000

 

TRANSACTION TYPE: Roll Out and Down

Small cap stocks stopped their torrid pace recently and CCI was finally able to harvest some option premium as described below.

 

TRANSACTION DATE: Fri, Nov 18

Action: Buy to close

Exp. Date: Nov. 16,  2013

Strike: $112

Price: $.04

 

Action: Sell to Open

Exp. Date: Dec 6, 2013

Strike: $110

Price: $.86

Net Credit/Contract after commissions: $.81

Rolled Covered Call in EEM ...Again

 UNDERLYING ETF: EEM  

 DESCRIPTION: iShares Emerging Market Shares 
 

TRANSACTION TYPE:   The emerging market ETF pulled back early this week and CCI took the opportunity to harvest some option premium and reposition the the covered call  portion of the portfolio as described below.

 

TRANSACTION DATE: Wed 10/23/13 

 

Action: Buy to Close

Exp. Date: Oct 25, 2013

Strike: $43

Price: $.24

 

Action: Sell to Open  

Exp. Date: Nov. 1, 2013 (one week out) 

Strike: $43.5

Price: $.24

 

Net Debit: $.02 after commissions

Rolled Covered Call in Emerging Markets ETF (EEM) Up and Out

The Index Covered Call Trading Plan  (aka: ICC) is CCI's approach for managing a position of index ETFs and related covered calls.  The most recent trade against this plan is described below.  A reader can find details about the rational and management of the trades at the ICC trading plan tab on CCI's home page. 

 

 UNDERLYING ETF: EEM  

 DESCRIPTION: iShares Emerging Market Shares 
 

TRANSACTION TYPE:   The emerging market ETF moved upward last week.  At the end of the week CCI rolled the covered call  position as described below.

 

TRANSACTION DATE: Fri 10/18/13 

 

Action: Buy to Close

Exp. Date: Oct 19, 2013

Strike: $42.50

Price: $.92

 

Action: Sell to Open  

Exp. Date: Oct 25, 2013 (one week out) 

Strike: $43

Price: $.66

 

Net Debit: $.29 after commissions

Small Caps Continue to Soar, Rolled IWM Covered Call Up and Out

The Index Covered Call Trading Plan  (aka: ICC) is CCI's approach for managing a position of index ETFs and related covered calls.  The most recent trade against this plan is described below.  A reader can find details about the rational and management of the trades at the ICC trading plan tab on CCI's home page. 

UNDERLYING ETF:  IWM

DESCRIPTION: iShares Russell 2000

 

TRANSACTION TYPE: Roll Out and Up

Small Cap Stocks continued to soar.  CCI rolled the IWM covered call position out and up and described below.

TRANSACTION DATE: Fri, Oct 18

Action: Buy to close

Exp. Date: Oct. 19,  2013

Strike: $108

Price: $2.25

 

Action: Sell to Open

Exp. Date: Nov. 16, 2013

Strike: $112

Price: $.87

Net Debit/Contract after commissions: $1.47

Rolled SPY Covered Calls

The Index Covered Call Trading Plan  (aka: ICC) is CCI's approach for managing a position of index ETFs and related covered calls.  The most recent trade against this plan is described below.  A reader can find details about the rational and management of the trades at the ICC trading plan tab on CCI's home page. 

UNDERLYING ETF: SPY 

 

 DESCRIPTION: SPDR S&P500 

 

TRANSACTION DESC:  Late Tuesday, rolled SPY covered calls as described below

 

Action: Buy to Close

Exp. Date: Oct. 19, 2013

Strike: $172

Price: $.49

Action: Sell to Open  

Exp. Date: Nov 16, 2013

Strike: $172

Price: $1.96

 

Net Credit after commissions: $1.38

Re-established Short Call in C

As discussed here CCI has a long position in the financial sector etf (xlf) via the Jan 15 $10 Call, that has usually been hedged via a shorter duration short call in Citigroup (C).

With D.C. dominating the news, CCI decided to re-establish a short call in Citigroup as a hedge against the long position in XLF held in the portfolio. Specifically, on Monday CCI sold the Nov 1 $52 call at $.32.

Since inception on Jan 8, the performance of various potential holdings  as of the close of trading today are shown below

• The XLF etf  is still up 19.4%! (including dividends)
• The leverage obtained by instead simply holding the Jan 15 $10 call would have returned 45.2%.
• The leveraged, long/short strategy defined in this thread is up 43.6%. (i.e the short call has not been very much of a drag on the leveraged gain while providing a modest hedge for down moves)

Note: C reported earnings and they did not seem to push the stock higher. This reduces the volatility/risk of the short call. As the price of the option decays look for CCI to close or roll this position relatively soon.

ICC Q3 Results

The Index Covered Call Trading Plan  (aka: ICC) is CCI's approach for managing a position of index ETFs and related covered calls.  The most recent trade against this plan is described below.  A reader can find details about the rational and management of the trades at the ICC trading plan tab on CCI's home page.  


CCI's accounting department (i.e. me) has been busy putting together spreadsheets of q3 results for the four index covered call positions that most of this quarter's posts cover.  After running these results past our staff auditors (me again), the technical staff (yes, me again) have posted q3 results for the ICC results, Buy & Hold results and some comparisons below.

                                                      ICC                B&H
                                                Q3      YTD          YTD               Variance         % of B&H Returned
SPY                                        1.6%    12.4%        19.7%           -  7.3%                   63%
IWM                                        7.1%    13.0%        27.0%           -14.0%                   48%
QQQ                                       2.2%      8.9 %       21.8%           -12.9%                   40%
EEM                                        5.9%   - 3.4%       - 6.9%           + 3.5%                    49%
TLT(10 yr Bond)                                                   -8.3%  
        
Some Observations

• The stock market has basically continued its one way trip higher this quarter.  That is the best environment for B&H, and where a covered call  strategy would expect to be the biggest drag on performance.  These results seem to support that assumption.
• Also as expected, the covered call approach continues to under perform the stock market when the market is up and over perform the stock market when the market is down.
• The combined performance of the four etf covered calls (7.7% ytd) approximates the return of a 60/40 stock/bond portfolio represented by 60% SPY/40% TLT (7.6%ytd).
• FYI, YTD performance for an etf offering a covered call strategy for the S&P 500(PBP) is up 5.4%. That is substantially less than the ICC SPY position (up 12.4%).  I'm still not sure what exactly is causing that difference, but I think it must have something to do with how the covered calls are managed.  It certainly does appear that investors should be aware that all covered call strategies are not exactly the same
• Lastly, the results of the covered call strategy as a percentage of the B&H strategy are shown in the final column. As a general statement, it seems the covered call strategy is achieving 50ish% of the stock market return. Obviously that means a less volatile ride over the long term.  . 

Rolled EEM Covered Calls

The Index Covered Call Trading Plan  (aka: ICC) is CCI's approach for managing a position of index ETFs and related covered calls.  The most recent trade against this plan is described below.  A reader can find details about the rational and management of the trades at the ICC trading plan tab on CCI's home page.  

UNDERLYING ETF: EEM     

DESCRIPTION: iShares Emerging Market Shares

 

TRANSACTION TYPE:   CCI rolled the covered call  position as described below.

 

TRANSACTION DATE: Fri 10/11/13  

 

Action: Buy to Close

Exp. Date: Oct 11, 2013

Strike: $42

Price: $.62

 

Action: Sell to Open  

Exp. Date: Oct 18, 2013 (one week out) 

Strike: $42.50

Price: $.55

 

Net Debit: $.09 after commissions