06/12/2013 Sold 5 SYMC Jun2013 $22.00 Call Options @ $.40
06/17/2013 Ex-dividend of $.15 per share
If Dividend Capture: +1.4% absolute return (equivalent to +47.3% annualized return) if the stock is assigned at June 2013 expiration on June 21st
As is often the case, early assignment provides a higher annualized return, so this is the Covered Calls Advisor's preferred outcome; but either outcome would provide a very good return. These returns will be achieved as long as the stock stays above the $22.00 strike price at assignment (0.9% of downside protection). Alternatively, if the stock declines below the strike price, the breakeven price of $21.79 ($22.19-$.40) provides 1.8% downside protection from the original $22.19 purchase price.
In summary, this covered calls investment provides the potential for nice absolute and annualized ROIs for a short-term (less than 2 weeks) covered calls trade. Normally, the Covered Calls Advisor uses this strategy for approximately one-month expirations, but this shorter-term situation was done to show that this strategy can be applied to other timeframes also.
The Covered Calls Advisor has established a set of criteria to identify situations that are advantageous for establishing covered calls positions that might achieve good returns from either an early assignment or from assignment upon options expiration. There are a very limited number of these "Early Assignment or Dividend Capture" covered call opportunites that meet the criteria below, but if/when we find them we should take full advantage.
As shown below, this SYMC position satisfies most of these criteria:
Stock Purchase Cost: $11,103.95
= ($22.19*500+$8.95 commission)
(a) Options Income: +$187.30
= ($.40*500 shares) - $12.70 commissions
(b) Dividend Income (If option exercised early on day prior to Jun 17th ex-div date): +$0.00
(b) Dividend Income (If stock assigned at Jun2013 expiration): +$75.00
= ($.15 dividend per share x 500 shares); or