LLY - Adjustment

The following adjustment was made today on LLY:

13-May-09 - Option Exercised - EX 1 May09 35.00 Call @ 35.00 -
13-May-09 - Repurchase Stock Position - BTO 100 LLY @ 35.32 -
13-May-09 - Interim Trade - STO 1 Jun09 35.00 Call @ 1.59 -

Today is ex-dividend date for LLY. I got too busy at work yesterday, since it was my first day back from vacation, and forgot to roll LLY out to Jun. The May09 35 call was exercised yesterday and I was notified this morning. So, I bought back the stock for $35.32 and sold a Jun09 35 Call to continue the position. This increased my Stock Investment by $32 ($4,971-3,500+3,532) from $4,971 to $5,003. Since I got called away before ex-dividend date I'll miss out on the dividend this quarter.

This is a good example of what you can do if you get exercised early and want to maintain a position in the same stock. Just buy it back and adjust your cost basis. I could have also sold a Jun09 35 cash secure put instead, which would not have increased my Stock Investment ($4,971-3,500+3,500), and the results would have been about the same.

NOTE: In a taxable account if you sell at a loss and repurchase the stock within 30 days, it's subject to the Wash Sale rule, meaning you won't be able to deduct the loss. However, if you trade in an IRA, like I do, the Wash Sale rule doesn't apply.

Current Position Summary:

Stock Investment: $5,003.00
Income Generated: $850.30
Percent Income Generated: 17.00%
Annualized Income Generated: 14.98%
Net Profit If Called: -$652.70
Percent Return If Called: -13.05%
Annualized Return If Called: -11.50%
Days Held to Expiration: 414 days

Trade History:

02-May-08 - Initial Stock Position - BTO 100 LLY @ 49.71 - Called
02-May-08 - Initial Call Option - STO 1 Jun08 50.00 Call @ 1.29 - Expired
10-Jun-08 - Dividend Received - DIV 100 Dividend @ 0.47 -
07-Jul-08 - Continued Trade - STO 1 Aug08 50.00 Call @ 0.29 - Expired
22-Aug-08 - Continued Trade - STO 1 Sep08 50.00 Call @ 0.32 - Expired
10-Sep-08 - Dividend Received - DIV 100 Dividend @ 0.47 -
23-Sep-08 - Continued Trade - STO 1 Oct08 50.00 Call @ 0.40 - Expired
20-Oct-08 - Interim Trade - STO 1 Nov08 40.00 Call @ 0.19 - Expired
24-Nov-08 - Interim Trade - STO 1 Jan09 40.00 Call @ 0.39 - Expired
10-Dec-08 - Dividend Received - DIV 100 Dividend @ 0.47 -
29-Jan-09 - Interim Trade - STO 1 Mar09 40.00 Call @ 0.90 - Expired
10-Mar-09 - Dividend Received - DIV 100 Dividend @ 0.49 -
24-Mar-09 - Interim Trade - STO 1 Apr09 35.00 Call @ 0.74 - Expired
21-Apr-09 - Interim Trade - STO 1 May09 35.00 Call @ 0.49 - Exercised
13-May-09 - Option Exercised - EX 1 May09 35.00 Call @ 35.00 -
13-May-09 - Repurchase Stock Position - BTO 100 LLY @ 35.32 -
13-May-09 - Interim Trade - STO 1 Jun09 35.00 Call @ 1.59 -