Continuation of Covered Calls Positions in Sea Limited ADR and Universal Health Services Inc.

My Covered Calls positions in Sea Limited ADR (ticker SE) and Universal Health Services Inc. (ticker UHS) closed out-of-the-money on their options expiration dates, so the Call options expired and the shares remained in the Covered Calls Advisor Portfolio.  This morning, I decided to continue both of these Covered Calls positions by selling Call options against the shares currently held.  The transactions-to-date for these positions as well as the potential return-on-investment results if these positions are in-the-money and therefore assigned on their respective options expiration dates are as follows:

1. Sea Limited ADR (SE) -- Rolled Out this Covered Calls Position
The original simultaneous buy/write transaction was as follows:
12/1/2025 Bought 200 Sea Ltd. shares @ $137.15
12/1/2025 Sold 2 SE 12/19/2025 $130.00 Call options @ $9.65 per share
Note: the Implied Volatility of the Calls was 43.0 when this transaction was executed.  As I prefer, this value exceeds that of the S&P 500 Volatility Index (VIX) which is currently at 17.2.
12/19/2025 Two Sea Ltd. Calls expired out-of-the-money, so the 200 shares remained in the Covered Calls Advisor Portfolio.
12/26/2025 Continued Covered Calls position by selling-to-open two 1/9/2026 $130.00 Calls at $2.38 per share when the price of Sea Ltd. stock was at $126.96.
1/9/2026 Sea Ltd. Covered Calls rolled out by buying-to-close the two 1/9/2026 $130.00 Calls at $4.25 per share and simultaneously selling two 1/23/2026 $130.00 Calls at $6.70 per share, so a net credit of $2.45 per share.
1/23/2025 Two Sea Ltd. Calls expired out-of-the-money, so the 200 shares remained in the Covered Calls Advisor Portfolio.
1/27/2025 Continued Covered Calls position by selling-to-open two 2/6/2026 $127.00 Calls at $3.30 per share when the price of Sea Ltd. stock was at $125.41.

A possible overall performance result (including commissions) for this Sea Ltd. Covered Calls position if the stock price is in-the-money and therefore assigned at the $127.00 strike price on the options expiration date is as follows:

Covered Calls Cost Basis: $25,501.34
= ($137.15 - $9.65) * 200 shares + $1.34 commission

Net Profit Components:
(a) Options Income: +$3,549.97
= ($9.65 + $2.38 - $4.25 + $6.70 + $3.30) * 200 shares - $6.03 commissions
(b) Dividend Income $0.00
(c) Capital Appreciation (If Sea Ltd. shares assigned at $127.00 strike price at the 2/6/2026 options expiration date): -$2,030.00
+($127.00 strike price - $137.15 stock purchase price) * 200 shares

Total Net Profit (If Sea's shares are assigned at the $127.00 strike price on the 2/6/2026 options expiration date): +$1,519.97

= (+$3,549.97 options income + $0.00 dividend income - $2,030.00 capital appreciation)

Absolute Return-on-Investment (If SE shares assigned at $127.00 strike price on the 2/6/2026 options expiration date): +6.0%

= +$1,519.97/$25,501.34

Annualized Return-on-Investment (If Sea Ltd. stock assigned at $127.00 strike price at the 2/6/2026 options expiration date): +32.5%

= (+$1,519.97/$25,501.34) * (365/67 days)

  

2. Universal Health Services Inc. (UHS) -- Rolled Out this Covered Call Position
The simultaneous buy/write transaction today was as follows:
12/30/2025 Bought 100 Universal Health Services shares @ $225.63
12/30/2025 Sold 1 UHS 1/16/2026 $220.00 Call option @ $8.67 per share
Note: the Implied Volatility of the Call was 28.5 when this transaction was executed.  As I prefer, this value exceeds that of the S&P 500 Volatility Index (VIX) which is currently at 14.3.
1/16/2025 One UHS Call expired out-of-the-money, so the 100 shares remained in the Covered Calls Advisor Portfolio.
1/27/2025 Continued Covered Call position by selling-to-open one 2/20/2026 $220.00 Call at $2.80 per share when the price of Univeral Health Services stock was at $212.80.

A possible overall performance result (including commissions) for this Universal Health Services Inc. Covered Call position if assigned on the options expiration date is as follows:
Covered Call Cost Basis: $21,696.67
= ($225.63 - $8.67) * 100 shares + $.67 commission

Net Profit Components:
(a) Option Income: +$1,145.66
= ($8.67 + $2.80) * 100 shares - $1.34 commission
(b) Dividend Income $0.00
(c) Capital Appreciation (If Universal Health shares assigned at their $220.00 strike price at options expiration): -$563.00
+($220.00 - $225.63) * 100 shares

Total Net Profit (If Universal Health Services shares assigned at the $220.00 strike price at the 2/20/2026 expiration): +$582.66

= (+$1,145.66 option income + $0.00 dividend income - $563.00 capital appreciation)

Absolute Return-on-Investment (If UHS shares assigned at $220.00 strike price on the Feb. 20th, 2026 options expiration date): +2.7%

= +$582.66/$21,696.67

Annualized Return-on-Investment (If Universal Health Services shares assigned at $220.00 at the 2/20/2026 options expiration date): +18.9%

= (+$303.33/$21,696.67) * (365/52 days)

Established Covered Calls in the D.R. Horton Inc.

This morning my Covered Calls net debit limit order was entered and immediately executed in D.R. Horton Inc. (ticker DHI) with a February 13th, 2026 options expiration date.  Two D.R. Horton Call options were sold at $7.67 at the $145.00 strike price when the stock price was $149.89 -- the net debit was $142.22 per share and the Call options time value profit potential was $2.60 [$7.67 options price - ($149.89 stock price - $145.00 strike price)].  The probability that the Calls will be in-the-money (i.e. above the $145.00 strike price) on the options expiration date was 67.0% when this position was established. There is an intervening ex-dividend of $.45 per share (1.2% annual dividend yield) on February 5th which is included in the potential return-on-investment results detailed below.

D.R. Horton is the largest homebuilder in America by market cap. Importantly, it is considered the best-in-class operator in its industry and has the highest exposure to the critically important entry-level buyers (67% of closings), lowest debt leverage, and least on-balance sheet land risk. 

As detailed below, two potential return-on-investment results are: (1) +2.0% absolute return-on-investment (equivalent to a +71.3% annualized return-on-investment in 10 days if the Calls are exercised and the stock is therefore assigned on the last business day prior to the February 5th ex-dividend date; and (2) +2.3% absolute return-on-investment (equivalent to a +46.1% annualized return-on-investment in 18 days if the DHI stock is in-the-money and the stock is assigned on its February 13th, 2026 options expiration date.

D.R. Horton Inc. (DHI) -- New Covered Calls Position
The Buy/Write transaction was as follows:
1/26/2026 Bought 200 shares of D.R. Horton Inc. stock @ $149.89 per share.  
1/26/2026 Sold 2 D.R. Horton February 13th, 2026 $145.00 Call options @ $7.67 per share.  The implied volatility of the Call options was 33.6 which, as preferred, is well above the current 16.1 of VIX.
2/5/2026 Upcoming ex-dividend of $.45 per share

Two possible overall performance results (including commissions) would be as follows:
Covered Calls Position Net Investment: $28,445.34
= ($149.89 - $7.67) * 200 shares + $1.34 commission

Net Profit Components:
(a) Options Income: +$1,534.00
= ($7.67 * 200 shares)
(b) Dividend Income (If option exercised early on Feb. 4th, the last business day prior to the February 5th ex-div date): +$0.00; or
(b) Dividend Income (If DHI stock assigned at the Feb. 13th, 2026 expiration): $90.00
= ($.45 dividend per share x 200 shares)
(c) Capital Appreciation (If D.R. Horton Call options assigned early on Feb. 5th): -$978.00
+($145.00 strike price - $149.89 stock price) * 200 shares; or
(c) Capital Appreciation (If shares assigned at $145.00 strike price at the Feb.13th options expiration): -$978.00
+($145.00 - $149.89) * 200 shares

1. Total Net Profit [If option exercised early on the last business day prior to the Feb. 5th ex-dividend date)]: +$556.00

= (+$1,534.00 options income +$0.00 dividend income -$978.00 capital appreciation); or

2. Total Net Profit (If stock shares assigned at $145.00 strike price at the Feb. 13th, 2026 expiration): +$646.00

= (+$1,534.00 options income +$90.00 dividend income -$978.00 capital appreciation)

1. Absolute Return-on-Investment (If option exercised early on Feb 5th): +2.0%

= +$556.00/$28,445.34

Annualized Return-on-Investment: +71.3%

= (+$556.00/$28,445.34) * (365/10 days); or

2. Absolute Return-on-Investment (If D.R. Horton shares assigned at $145.00 at the Feb. 13th, 2026 options expiration date): +2.3%

= +$646.00/$28,445.34

Annualized Return-on-Investment (If shares assigned at the 2/13/2026 options expiration date): +46.1%

= (+$646.00/$28,445.34) * (365/18 days)

At least eight of the nine metrics used in the Covered Calls Advisor's Dividend Capture Strategy spreadsheet must be 'YES' prior to establishing a position.  As shown below with this D.R. Horton Inc. position, eight of the nine criteria were met.

Closed Covered Call Positions in Microsoft Corporation and ServiceNow Inc.

On the January 16th, 2026 options expiration date, the Covered Call positions in Microsoft Corporation (ticker MSFT) and ServiceNow Inc. (ticker NOW) closed out-of-the-money, so their Call options expired and their shares remained in the Covered Calls Advisor Portfolio. Today I decided to close out both positions at a loss by selling the 100 shares of Microsoft at $470.13 and the 100 shares of ServiceNow at $135.36. Both companies are reporting quarterly earnings this Wednesday after market close and since I prefer not holding stocks during their earnings report, because of the accompanying stock price volatility, I decided to sell out of these positions. The transactions history for these positions and their associated return-on-investment results are detailed below.

 

1. Microsoft Corporation (MSFT) -- Closed Out Covered Call Position

The original net debit buy/write limit order was executed as follows:
10/30/2025 Bought 100 shares of Microsoft stock @ $522.64 per share.  
10/30/2025 Sold 1 MSFT November 7th, 2025 $512.50 Call option @ $14.08 per share.  The Implied Volatility of the Call was 25.3 when this transaction was executed.

11/7/2025 One hundred Microsoft shares closed below the $512.50 strike price at $496.77, so the one Call option expired and the 100 Microsoft shares remained in the Covered Calls Advisor Portfolio.

11/10/2025 Continued this Microsoft Corporation Covered Call position by selling 1 November 14th, 2025 $505.00 Call option at $4.00 per share when the stock was trading at $502.45 per share.

11/14/2025 One Microsoft 11/14/2025 $505.00 Call option expired out-of-the-money, so the 100 Microsoft shares remain in the Covered Calls Advisor Portfolio.

11/20/2025 Ex-dividend of $.91 per share.

11/28/2025 Continued this Microsoft Covered Call position by rolling down-and-out by selling one 12/12/2025 $492.50 Call option at $8.20 per share.  

12/12/2025 One hundred Microsoft shares closed below the $492.50 strike price, so the one Call option expired and the 100 Microsoft shares remained in the Covered Calls Advisor Portfolio.

12/18/2025 Continued this Microsoft Corporation Covered Call position by selling 1 January 2nd, 2026 $487.50 Call option at $6.30 per share when the stock was trading at $484.12 per share.

1/2/2026 One hundred Microsoft shares closed below the $487.50 strike price, so the one Call option expired and the 100 Microsoft shares remained in the Covered Calls Advisor Portfolio.

1/7/2026 Continued this Microsoft Corporation Covered Call position by selling 1 January 16th, 2026 $485.00 Call option at $5.40 per share when the stock was trading at $482.40 per share.  

1/16/2026 This Microsoft Call option expired out-of-the-money at $459.86 per share and the 100 shares remain in the Covered Calls Advisor Portfolio.

1/26/2026 Closed out this Microsoft Covered Call position by selling the 100 shares at $470.13.

The overall performance result (including commissions) for this position is as follows:
Microsoft Covered Call Net Investment: $50,856.67
= ($522.64 - $14.08) * 100 shares + $.67 commission

Net Profit Components:
(a) Call Option Income: +$3,794.65
= ($14.08 + $4.00 + $8.20 + $6.30 + $5.40) * 100 shares - $3.35 commissions
(b) Dividend Income: +$91.00 = $.91 ex-dividend x 100 shares
(c) Capital Appreciation (Microsoft stock sold at $470.13 per share): -$5,264.00
= ($470.13 stock selling price - $522.64 stock purchase price) * 100 shares

Total Net Loss: -$1,378.35
= (+$3,794.65 Call option income + $91.00 dividend income - $5,264.00 capital appreciation)

Absolute Return-on-Investment: -2.7%
= -$1,378.35/$50,856.67
Equivalent Annualized-Return-on-Investment: -11.2%
= (-$1,378.35/$50,856.67) * (365/88 days)

2. ServiceNow Inc. (NOW) -- Closed Out Covered Call Position

The original simultaneous buy/write transaction was as follows:
1/6/2026 Bought 100 ServiceNow Inc. shares @ $148.32
1/6/2026 Sold 1 ServiceNow 1/16/2026 $145.00 Call option @ $5.20 per share
Note: the Implied Volatility of this Call option was 31.4 when this transaction was executed.  As I prefer, this value exceeds that of the S&P 500 Volatility Index (VIX) which is currently at 15.0.
1/16/2026 This ServiceNow Call option expired out-of-the-money at $127.31 per share and the 100 shares remain in the Covered Calls Advisor Portfolio.
1/26/2026 Closed out this ServiceNow Covered Call position by selling the 100 shares at $135.36.

The overall performance result (including commissions) for this position is as follows:
Covered Call Cost Basis: $14,312.67
= ($148.32 - $5.20) * 100 shares + $.67 commission

Net Profit Components:
(a) Option Income: +$519.33
= ($5.20 * 100 shares) - $.67 commissions
(b) Dividend Income $0.00
(c) Capital Appreciation (ServiceNow stock sold at $135.36 strike price at options expiration): -$1,296.00
+($135.36 strike price - $148.32 stock purchase price) * 100 shares

Total Net Loss (ServiceNow shares sold at $135.36 per share): -$776.67

= (+$519.33 Call option income + $0.00 dividend income - $1,296.00 capital appreciation)

Absolute Return-on-Investment: -5.4%

= -$776.67/$14,312.67

Annualized Return-on-Investment: -99.0%

= (-$776.67/$14,312.67) * (365/20 days)

January 23rd, 2026 Options Expiration Results

The Covered Calls Advisor Portfolio had three Covered Calls positions with the January 23rd, 2026 weekly options expiration date.  Two positions (Arista Networks Inc. and NVIDIA Corporation) closed in-the-money so their Calls expired and the shares were called away (i.e. sold) at their respective strike prices.  The other position in Sea Limited ADR closed out-of-the-money so its Calls expired and its shares remain in the Covered Calls Advisor Portfolio.  A summary of results for each of these positions is as follows:

1. Arista Networks Inc. (ANET) -- +2.0% absolute return (equivalent to +48.2% annualized return-on-investment) for the 15 days of this investment.  This Covered Call position was assigned at the $118.00 strike price since the stock closed in-the-money at $136.34 per share.  The blog post detailing this Covered Call position is here. 

2. NVIDIA Corporation (NVDA) -- +2.0% absolute return (equivalent to +39.9% annualized return-on-investment) for the 18 days of this investment.  This Covered Call position was assigned at the $180.00 strike price since the stock closed in-the-money at $187.67 per share.  The original blog post detailing this Covered Call position is here. 

3. Sea Limited ADR (SE) -- This Covered Calls position closed yesterday at $124.78 which was below its $130.00 strike price, so the two Call options expired and 200 SE shares now remain in the Covered Calls Advisor Portfolio.  The most recent blog post detailing this position is here.  Early in this upcoming week I will decide to either continue this Covered Calls position by selling two Call options against the 200 Sea Ltd. shares currently held or close out the position by selling the 200 shares.   

I welcome your feedback at my email address shown below on any questions or topics related to the Covered Calls investing strategy.

Jeff Partlow
The Covered Calls Advisor
partlow@cox.net