Saturday, March 18, 2017

March 2017 Option Expiration Results

Four of the six March 2017 positions in the Covered Calls Advisor Portfolio closed in-the-money at expiration, so the maximum possible return-on-investment result was achieved for these four positions: Alibaba Group Holdings Ltd, Big Lots Inc., Magna International Inc., and PulteGroup Inc. 

For the two other positions (Hawaiian Holdings Inc. and Noble Energy Inc.), the price of the stock closed below the strike prices, so the short Put options were assigned and shares were purchased at the strike prices. These shares will remain in the Covered Calls Advisor Portfolio until they are either sold or continuation covered calls positions will be established by selling Apr2017 call options against the shares now owned.

I.  For the four closed positions:
The return-on-investment results for each position was:
  • Alibaba Group Holdings Ltd. = +1.2% absolute return (+19.7% annualized return) in 23 days
  • Big Lots Inc. = +1.0% absolute return (+46.7% annualized return) in 8 days
  • Magna International Inc. = +1.4% absolute return (+28.0% annualized return) in 18 days
  • PulteGroup Inc. = +1.5% absolute return (+35.4% annualized return) in 15 days
The cash now available in the Covered Calls Advisor Portfolio from the closing of these positions will be retained until new Covered Calls and/or 100% Cash-Secured Puts positions are established.  Any new positions established with this available cash will be posted on this site on the same day the transactions occur.  The return-on-investment results for these four closed positions are detailed below.  


1. Alibaba Group Holdings Ltd. -- 100% Cash-Secured Put Options Position Closed at Expiration
The transactions were as follows:
02/23/2017  Sold 5 BABA 100% cash-secured $100.00 Put options with Mar2017 expirations @ $1.26
Note: the price of Alibaba was $102.77 today when this transaction was executed.
03/17/2017 5 BABA Put options expired
Note: the price of BABA shares was $105.61 at expiration

The overall performance result (including commissions) was as follows:
100% Cash-Secured Cost Basis: $50,000.00
= $100.00*500

Net Profit:
(a) Options Income: +$621.80
= ($1.26 * 500 shares) - $8.20 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (BABA closed above $100.00 strike price at Mar2017 expiration): +$0.00
= ($100.00 -$100.00)*500 shares

Total Net Profit: +$621.80
= (+$621.80 options income +$0.00 dividend income +$0.00 capital appreciation)

Absolute Return: +1.2%
= +$621.80/$50,000.00
Annualized Return: +19.7%
= (+$621.80/$50,000.00)*(365/23 days)


2. Big Lots Inc. -- Covered Calls Position Closed at Expiration
The transactions were:
03/10/2017 Bought 500 BIG shares @ $51.12
03/10/2017 Sold 5 BIG Mar2017 $50.00 Call options @ $1.42
Note: a simultaneous buy/write transaction was executed.
03/15/2017 Ex-dividend of $125.00 = $.25 per share x 500 shares
03/17/2017 500 shares BIG assigned at $50.00 strike price
Note: BIG shares closed at $50.01 at expiration

The performance result (including commissions) for this Big Lots Inc. covered calls position was as follows:
Stock Purchase Cost: $25,564.95
= ($51.12*500+$4.95 commission)

Net Profit:
(a) Options Income: +$701.80
= ($1.42*500 shares) - $8.20 commissions

(b) Dividend Income: +$125.00
= ($.25 dividend per share x 500 shares)
(c) Capital Appreciation (BIG assigned at $50.00 at Mar2017 expiration): -$564.95
+($50.00-$51.12)*500 - $4.95 commissions

Total Net Profit (BIG assigned at $50.00 at Mar2017 expiration): +$261.85
= (+$701.80 +$125.00 -$564.95)

Absolute Return (BIG assigned at $50.00 at Mar2017 expiration): +1.0%
= +$261.85/$25,564.95
Annualized Return: +46.7%
= (+$261.85/$25,564.95)*(365/8 days)


3. Magna International Inc. -- Covered Calls Position Closed at Expiration
The transactions were:
02/28/2017 Bought 500 MGA shares @ $43.49
02/28/2017 Sold 5 MGA Mar2017 $42.50 Call options @ $1.35
Note: a simultaneous buy/write transaction was executed.
03/08/2016 Ex-dividend of $137.50 = $.275 per share x 500 shares
03/17/2017 500 shares MGA assigned at $42.50 strike price
Note: MGA shares closed at $44.04 at expiration

The overall performance result (including commissions) for this Magna International covered calls position was as follows:
Stock Purchase Cost: $21,751.95
= ($43.49*500+$6.95 commission)

Net Profit:
(a) Options Income: +$664.55
= ($1.35*500 shares) - $10.45 commissions

(b) Dividend Income (MGA assigned at Mar2017 expiration): +$137.50
= ($.275 dividend per share x 500 shares)
(c) Capital Appreciation (MGA assigned at $42.50 at Mar2017 expiration): -$501.95
+($42.50-$43.49)*500 - $6.95 commissions

Total Net Profit (MGA assigned at $42.50 at Mar2017 expiration): +$300.10
= (+$664.55 +$137.50 -$501.95)

Absolute Return (MGA assigned at $42.50 at Mar2017 expiration): +1.4%
= +$300.10/$21,751.95
Annualized Return: +28.6%
= (+$300.10/$21,751.95)*(365/18 days)


4. PulteGroup Inc. -- Covered Calls Position Closed at Expiration
The transactions were:
03/03/2017 Bought 1,000 PHM shares @ $22.23
03/03/2017 Sold 10 PHM Mar2017 $22.00 Call options @ $.48
Note: a simultaneous buy/write transaction was executed.
03/08/2017 Ex-dividend of $90.00 = $.09 per share x 1,000 shares

The performance result (including commissions) for this PulteGroup, Inc. covered calls position was as follows:
Stock Purchase Cost: $22,234.95
= ($22.23*1,000+$4.95 commission)

Net Profit:
(a) Options Income: +$468.55
= ($.48*1,000 shares) - $11.45 commissions

(b) Dividend Income (PHM shares assigned at Mar2017 expiration): +$90.00
= ($.09 dividend per share x 1,000 shares)
(c) Capital Appreciation (PHM assigned at $22.00 at Mar2017 expiration): -$234.95
+($22.00-$22.23)*1,000 - $4.95 commissions

Total Net Profit (PHM assigned at $22.00 at Mar2017 expiration): +$323.60
= (+$468.55 +$90.00 -$234.95)

Absolute Return (PHM assigned at $22.00 at Mar2017 expiration): +1.5%
= +$323.60/$22,234.95
Annualized Return: +35.4%
= (+$323.60/$22,234.95)*(365/15 days)