Yes, I am a sailor, and have had aspirations to be the media-crew-member (and submitted an application to be) the on-board reporter for a Volvo Ocean Race boat. (9 months at sea, 30 days at a time, on a carbon-fibre sailing yacht with 8 smelly, unwashed crew-mates, no showers, freeze-dried food, open oceans, Atlantic, Pacific, Indian, and southern ocean crossings, pirates, fishing-nets, hurricanes, squalls, 100kph winds... what could go wrong?)
But that bloated intro completely digressed from my analogy: My ship came in: as in, I closed a spread today (9:58am EDT) on $MA. I opened the position on August 22 and closed it today on Oct 30. Which is a grand total of 69 days.
Mastercard (and Visa) reported excellent earnings for the past quarter and the stocks surged 6-7% at open. My position blew right past my target of 75% capture (75% of the available premiums stay in my pocket), so I decided to close the position.
August 22 I opened the following:
bought 5 contracts of $MA 65 puts expiring Jan 2015 for $0.8020. $3.98 commission = -$404.98
sold 5 contracts of $MA 70 puts expiring Jan 2015 for $0.1.672. $4.02 commission. = $831.98
So the difference = $427 (my max gain)
Max loss = 5 contracts * $5 spread = $2500 - (premiums collected) = $2073.
My close cost me
$65 puts (sold to close $0.18) for $85.55 ($2.45 commission)
$70 puts (bought to close $0.34) for -$172.45 ($2.44 commission)
For a difference of $86.90.
Thus I kept $342.10 of the maximum of $427. An 80% capture.
So the gain of $342.10 over the maxim loss of $2073 = 16.5% gain. Which doesn't sound like all that much, but as the position was only open for 69 days, theoretically that's a 86.6% annualized yield.
Even still: all of you buy and hold, can't beat the index nay-sayers: I made a 16.5% return in 69 days. Think about that for a while!
Final notes: my explanations in the future will not be so verbose. I'll post trade summaries including position, closing price, percentage capture, and how long it was open.
Finally, I still have a $MA position open. It expires in April of 2015 and hasn't yet hit my target. Will continue to hold.