Monday, July 22, 2013

Income Trade Update

I  did an income trade a while ago with Royal Bank. 

May 15, 2013 - Purchased 100 shares of Royal Bank at 61.26  for a total of 6130.30 including commissions.

May 16, 2013 - Wrote a covered call Jun 22, 2013 62 for a option premium of 69.05 after commissions. I receive this premium right away as I am obligated to sell my shares at 62.00 strike price on or before expiration date. The option expired an I got to keep my shares.

June 26, 2013 - Wrote second covered call July 19, 2013 62 for an option premium of 39.05 after commissions. Like above I received this immediately in my brokerage account.

July 19, 2013 - My shares were called away as the price of  Royal Bank went up over $65 a share.
The assignment has a commission of 12.00 for the broker I use.

Total Return = Profit / Money invested
                     = (6200-6130.30+39.05+69.05-12.95)/6130.30

NOTE : I originally used an option assignment charge of $12.00, but after checking trading confirmations noticed it was changed to $12.95.

So what did I do with the option premiums and the capital gain from this trade ( Total $165.80). It stays in my brokerage account.

I missed the dividend record date for Royal Bank when I purchased the stock.

So for comparison sake, if I just sold the shares at $62.00 (assuming $4.95 commission to sell)
             Total Return = (6200-6130.30-4.95)/6130.30
                                  = 1.06%


     I am not a financial planner, financial advisor, accountant or tax attorney. The information on this blog represents my own thoughts and opinions and should NOT be taken as investment or business advice.  Every individual should do their due diligence to make their own financial decisions based on their financial situation and tolerance for risk

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