Russian Covered Call Ideas, VIP, RSX
The chart on VIP looks pretty darn good, liking it, and I do own it outright in my 401k account. Will likely buy some in the money calls anyway as they are quite cheap.
The Covered Call contender is actually RSX, the Russian ETF.
Current Price 25.25
Looking at:
Sept $25.50 Strike @ $.85
Investment Required (Full Cash Basis)
Total Cost of Stock $12,625.00
Stock Commission:
Total Premium Received $425.00
Option Commission: $15.00
Investment Required $12,215.00
Results at Expiration Stock Unchanged
Value of Stock $12,625.00
Dividends received: $-
Initial investment: $12,215.00
Profit/Loss $410.00
% Return on initial investment: 3.36%
Annualized return: 49.01%
Stock Above Exercise Price
Exercise Proceeds $12,750.00
Exercise Commission:
Dividends received: $-
Initial Investment: $12,215.00
Profit/Loss $535.00
4.38%
63.95%
Downside Protection
Breakeven Point: $24.43
Downside Protection: 3.25%
Overall, while a 5% or so gain, the annualized return is quite good. October numbers on annualized basis just a bit lower.
Alternatively, this should work well on a Calendar Spread basis. That is you buy a longer term, in the money call, and write a shorter, high strike against it.
