Friday, December 1, 2006

NSS - Review

Here's a position on NSS that closed in June. The following is the trade history and returns, including IB commissions.

03/20/06 - Bought 100 shares @ 42.27
03/20/06 - Sold 1 Jun06 40 Call @ 4.89
06/16/06 - Jun06 40 Call exercised and stock called away

Stock Investment: $4,227.00
Income Generated: $489.00
Net Profit: $262.00
Percent Return: 6.20%
Annualized Return: 25.71%
Duration of Trade: 88 days

Buy & Hold Comparison

Opening Price: $42.27
Closing Price: $47.89
Dividends: $0.00
Net Profit: $562.00
Percent Return: 13.30%
Annualized Return: 55.16%
Duration of Trade: 88 days

This position did worse than buy and hold. If you look at a chart of NSS you'll see that the stock rose shortly after the initial purchase and then declined. It traded as high as $55.43 in April, or up about 31%, and as low as $65.51 in June, or up about 5%.

No adjustments were needed for this trade and the profit was received 3 months before the position closed. Even though I could have done better with buy and hold, I still exceeded my goal of 12-24% annualized, and am therefore satisfied with the return.