Sunday, February 28, 2016

Covered Call Option in QSR

    During the month of January, I wrote about writing a covered call in QSR.  This covered call expired as the QSR was trading below the strike price of $52.00 at expiration date of Feb 19.  I get to keep the stock and get to keep the option premium.  The annualized return on this covered call was 9.452% annualized or 0.751% for 29 days.  My high interest savings account pays an annual interest of 0.8% right now, which is actually laughable.

     So, I once again decided to write a covered call in QSR.  QSR is the ticker symbol for Restaurant Brands International.  Restaurant Brands International is the parent company that owns Burger King and Tim Hortons.  On February 24, I sold a covered call for $0.50 per contract  at a strike price of $48.00 with an expiration date of March 18, 2016.  So, I received a premium of $39.05 after commissions.


Option Premium including commissions = $39.05
Days to expiration = 24

Return =  $39.05/$4800
            = 0.814%

This represents a return of 0.814% for 24 days.  That is, if the stock is not called away prior to on the option expiration date. 

Annualized Return = .814%/24*365
                               = 12.38%

 I have wrote several covered calls on this stock.

Disclosure:  Long QSR

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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