I have extra cash that I will need them by 4/15/11. I want those cash to generate some profit for me. I can only afford to expose to minimum risk.
Among all my holding, Microsoft is still selling at bargain price. Downside is minimum. Only draw back is, option premium is low. However, it is important to have minimum risk. So, i am ok with lower profit
Action:
Today, 2/22, i purchased 8,000 shares of Microsoft at 26.72 per share. Paid 8000x$26.72=213,760. I immediately sold April 16 ($25) call for 2.05. Pocketed $16,400 today.
Translation:
If I success, that means by 4/16, MSFT stock close at above $25. My position will be sold at $25 x 8000 = 200,000 Plus the premium i pocked today, that is $200,000 + 16,400 = $216,400
My initial investment 213,760, that means profit of (216400-213760 = $2,640) Also means return of 1.24% profit. The whole duration will be 53 days. That means 8% annualized return.
If I fail, that means by 4/16, MSFT stock close below $25 and I will keep my 8000 shares stock. My unit cost for those stock will be 26.72-2.05 = $24.67
Bottom Line
I am not too worry about success. (I think my chance of success is over 90%) If i fail, unit cost of $24.67 is a great great great bargain. I don't mind to hold it. I can always use other fund to pay for my personal tax. hehehe. I will make profit regardless of the result. The only difference is, success, i will will make set amount of profit within 53 days. If i fail, i will make unknown amount of profit at unknown amount of time.
This is a TRADING action. Not a investment action. Investment is for longer term.
I will update you the result.
4/16/2011 Operation success
No comments:
Post a Comment