Yong-Long Lai

Got assigned on my NVDA – Everything here is in US dollars

The Trade (18th June 2007)
Shares/Contract = 100
Buy 500 NVDA @ $39.91 (-$19,955)
Sell 5 NVDA 40 Calls @ $1.76 (+$880)
NVDA closed @ 39.57 on this day

I was exercised/assigned (20th July 2007)
Sell 500 NVDA @ $40 (+$20,000)
NVDA closed @ 45.10 on this day

Net Transactions: -$19,955+$880+$20,000= $925
Brokerage = $14.95 * 3 + $0.31 + $0.02 = $45.18

Net Profit = $879.82

Money in trade: $9,977.5
ROI: $925/$9,977.5 = 9.27% (before brokerage & fees)

Again, some people may be thinking I got ripped off because the stock is worth $45.10 when I only sold it for $40 and that I could have made an extra $2,550 (45.1-45)*500. In this strategy I am giving away for future profits that MAY or MAY NOT be there… I’m not a fortune teller and I don’t know what’s going to happen in 1 months time. All I know is that somebody will pay me real money today so that they have an opportunity to borrow my shares for ~1 month. I never wanted the shares, I just wanted something I can lease out to those guys so I bought some of these shares.

Not bad for for less than 1 hrs work. Thats like $925 per hour!