Friday, June 15, 2007

MDT - Adjustment

The following adjustment was made today on MDT:

After watching MDT trade around the Jul07 52.50 strike price all day I finally decided to roll it out and up to Jul07 55.00 call during the last 15 minutes of trading when it went ITM. Of course, as soon as I rolled it the priced dropped back down and ended up closing OTM.

15-Jun-07 - Buy Back & Roll Out/Up - BTC 1 Jun07 52.50 Call @ -0.06 -
15-Jun-07 - Continued Trade - STO 1 Jul07 55.00 Call @ 0.49 -

Current Position Summary:

Stock Investment: $5,272.00
Income Generated: $121.00
Percent Income Generated: 2.30%
Net Profit If Called: $349.00
Percent Return If Called: 6.62%
Annualized Return If Called: 27.46%
Days to Expiration: 88 days

Trade History:

23-Apr-07 - Initial Stock Position - BTO 100 MDT @ 52.72 - VICC
23-Apr-07 - Continued Trade - STO 1 May07 55.00 Call @ 0.19 - Expired
21-May-07 - Continued Trade - STO 1 Jun07 52.50 Call @ 0.59 - Closed
15-Jun-07 - Buy Back & Roll Out/Up - BTC 1 Jun07 52.50 Call @ -0.06 -
15-Jun-07 - Continued Trade - STO 1 Jul07 55.00 Call @ 0.49 -

Note that as a VICC position the primary objective is capital appreciation. The stock will be held long term until it reaches or surpasses it's fair value. Front month OTM call options are sold to bring in a small amount of income while waiting for the stock to appreciate. The calls are sold far enough OTM to avoid assignment and the need to make any mid-month adjustments.