RMBS - Assignment

Systematic Covered Writing

... more than just covered calls!

(The SysCW Home Page)

Option Assigned Examples

THE STOCK: RMBS - Rambus Inc.

POSITION ESTABLISHED DATE: January 4, 2006

ASSIGNMENT DATE: January 19, 2007

THE RESULT: The complete history of the position is maintained indefinitely in the Position Tracker. The Tracker becomes the SysCW evidence manual over time. What the Tracker does not show is what happened to the price of this stock during the holding period.

			Systematic Covered Writing
			. . . More than just covered calls . . .
		SysCW Position Tracker

Historical Data			Open Position
				Stock	Cash	Total Cash	Value as of
Date	Strategy	Status	Position	Investment	Generated	Generated	4-Jan-07
4-Jan-06	Initial Stock Purchase		Buy 100 RMBS @ 18.389	($1,845.90)			$1,950.00
	Current Price	$19.50	Rambus Inc.
4-Jan-06	Initial Call Option		Sell '07 Jan $17.50 LEAP @ 5.00		$491.72

	Cash in Hand	26.64%				$491.72

COMMENTS: Will RMBS be above $17.50 in two weeks (Jan 19, 2007)? Nobody knows, but if it is, this stock holding will be assigned. Notice that if that happens, only eighty-nine cents a share will be given back due to the difference between the strike price and the stock purchase price. This will be an above average back-to-cash gain IF the option is exercised. If not, the writer will simply recover the position.

Often you will read the thought that the writer does not 'care' about the value of the stock at given times. This is a perfect example of why. As you may know, RMBS traded below $11 and above $40 during 2006. Neither the high, nor the low, have any significance to the position other than they occurred. The only value that really matters will be the value on January 19, 2007.

It is possible that the position may be rolled if the price falls closer to $17.50. We will see.

As a subscriber, you will be able to watch what happens . . . right here.

Up Date January 19, 2007

SysCW Position Tracker

Historical Data

Closed Position

Stock

Cash

Total Cash

Annualized

Date

Strategy

Status

Position

Investment

Generated

Return

4-Jan-06

Initial Stock Purchase

Buy 100 RMBS @ 18.389

($1,845.90)

Rambus Inc.

4-Jan-06

Initial Call Option

Sell '07 Jan $17.50 LEAP @ 5.00

$491.72

19-Jan-07

Stock Assigned

Sell 100 RMBS @ 17.50

$1,732.97

($112.93)

19-Jan-07

$378.79

Annualized

380

Days

20.52%

19.71%

Slightly over a year and an annualized cash generation of 19.71%. It was quite a ride during the holding period. In the end, all that really mattered was the closing price today, which happened to be $17.85.

PLEASE NOTE THAT THIS EXAMPLE IS NOT TO BE CONSIDERED AS A RECOMMENDATION TO INVEST IN RMBS STOCK OR ANY OTHER EQUITY. THE INFORMATION IS PROVIDED FOR EDUCATIONAL PURPOSES ONLY. THERE IS NO GUARANTEE THAT SIMILAR TRANSACTIONS CAN BE EXECUTED IN THE FUTURE. INVESTING IN THE STOCK MARKET INVOLVES RISKS, DO SO ONLY WITH A KNOWLEDGE AND UNDERSTANDING OF THE RISKS INVOLVED!
The information provided above is for informational purposes only, and no mention of a particular security constitutes a recommendation to buy, sell, or hold that or any other security, or that any particular security, portfolio of securities, transaction, investment strategy is suitable for any specific person. You further understand that the Covered Writer will not advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. To the extent any of the information available on this website may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person. Always remember that past results are not necessarily indicative of future performance.
These are the terms of use. Why are they here? Because the examples provided are real. The transactions actually took place. The dates are real, the positions are real. Some transactions will have been executed on the day you receive the email. What you are agreeing to, is the fact that in no way is it being suggesting that you can, or should, enter a similar position. Why? Because that would be providing investment advice and the Covered Writer is not authorized to do that. There is also no guarantee that similar transactions could be executed at any time in the future. Only licensed brokers are allowed to provide investment advice. Therefore, you are agreeing that the preceding example was provide for 'educational purposes' for the sole purpose of illustrating the Systematic Covered Writing strategies.
Thank you! Bq