Sunday, May 22, 2011

GD - Closed




The General Dynamics Corporation (GD) May11 65.00 Call was excercised and the position was closed at a loss. All prices include IB commissions.

I entered this position on 4/28/10 by selling a $75 CSP, which was above my target buy price of $60. That was my first mistake. By 7/13/10, GD had declined to $60.56 and the Aug10 $75 Put was assigned. I held it uncovered for over a month. The price continued to decline until it hit a low of $55.87 on 8/31/10. On 9/1/10 I sold the Jan11 $65 Call. Then the stock start a long uptrend, surpassing the $65 strike. I continued to roll out the $65 Call but the stock kept rising. I finally decided to let it get called away at a loss on Friday. In hindsight, I should have had the patience to wait for GD to trade near my target buy price of $60, rather than enter at $75. But given the bad entry, I should have managed the position better also, by leaving it uncovered until I could sell the $75 call for a decent premium.

Position Summary





Cost Basis$7,500.00
Net Profit($313.26)
Percent Return-4.18%
Annualized Return-3.94%
Days Held to Expiration387 days


Trade History




















DateStockDescriptionTransactionStatusStock InvestmentIncome Generated
4/28/2010GDCSP Margin UsedCSP 100 GD @ 75.00 ($7,500.00) 
4/28/2010GDInitial Put OptionSTO 1 May10 75.00 Put @ 0.99Closed $98.99
5/21/2010GDBuy Back and Roll Out/DownBTC 1 May10 75.00 Put @ -8.17  ($816.86)
5/21/2010GDInterim TradeSTO 1 Aug10 75.00 Put @ 9.98Exercised $998.14
7/13/2010GDCSP Margin ReturnedCSP 100 GD @ -75.00 $7,500.00 
7/13/2010GDStock AssignedEX 1 Aug10 75.00 Put @ -75.00 ($7,500.00) 
9/1/2010GDInterim TradeSTO 1 Jan11 65.00 Call @ 1.24Closed $123.99
11/12/2010GDDividend ReceivedDIV 100 Dividend @ 0.42  $42.00
12/21/2010GDBuy Back and Roll OutBTC 1 Jan11 65.00 Call @ -5.47  ($546.76)
12/21/2010GDInterim TradeSTO 1 May11 65.00 Call @ 6.98Exercised $698.24
2/4/2011GDDividend ReceivedDIV 100 Dividend @ 0.42  $42.00
5/6/2011GDDividend ReceivedDIV 100 Dividend @ 0.47  $47.00
5/20/2011GDOption ExercisedEX 1 May11 65.00 Call @ 65.00  $6,500.00
5/20/2011GD Net Cost/Profit-Loss ($7,500.00)($313.26)
DTE387 Percent Profit-Loss/Annualized -4.18%-3.94%