Tuesday, January 24, 2012

SPY - New Position

A new CSP position was established today on SPDR S&P 500 ETF (SPY). All prices include IB commissions.

This position represents a new strategy for idle cash. The idea is to earn interest at the current 10 Year Treasury rate (2.05%) or more for a period of 1 year or less. I chose the lowest possible strike and shortest expiration that met the criteria. The 85 strike provides 35% downside protection at the current price through Dec 2012, and is at a multi-year support level. This seems like a pretty safe bet and it beats leaving cash in the account at zero interest.

DateStockDescriptionTransactionStatusStock InvestmentIncome Generated
1/24/2012SPYCSP Margin UsedCSP 100 SPY @ 85.00 ($8,500.00) 
1/24/2012SPYInitial Put OptionSTO 1 Dec12 85.00 Put @ 1.63  $162.97

Position Summary

Cost Basis($8,500.00)
Income Generated$162.97
Percent Income Generated1.92%
Annualized Income Generated2.11%
Net Profit If Assigned$162.97
Percent Return If Assigned1.92%
Annualized Return If Assigned2.11%
Days Held to Expiration332 days