Saturday, July 22, 2017

July 2017 Option Expiration Results

The Covered Calls Advisor Portfolio had nine positions with July 21, 2017 options expirations.  Three positions were closed prior to the July 21st expiration:
  • One covered calls position in JPMorgan Chase & Co. was closed by early assignment --See detailed results here: link
  • Two of these (Range Resources Corp. and Alibaba Group Holding Ltd.) were closed out by the Covered Calls Advisor a week early (on July 14th) since the short Puts had declined to only $.05 (See detailed results here: Range Resources link and here Alibaba link). 
Of the total nine positions, the remaining six were held until yesterday's July 21st expiration.  Of these, four positions (Pioneer Resources Co., Quanta Services Inc., Twenty-First Century Fox Inc., and Voya Financial Inc.) closed in-the-money, so the maximum possible return-on-investment result was achieved.  Details of the transactions and results for each of these positions are provided below.

The return-on-investment results for each closed position was:
  • Pioneer Resources Co.:  +1.8% absolute return (+17.9% annualized return) in 36 days
  • Quanta Services Inc.:  +1.9% absolute return (+17.6% annualized return) in 40 days  
  • Twenty-First Century Fox Inc.+3.1% absolute return (+15.4% annualized return) in 74 days
  • Voya Financial Inc.:  +1.6% absolute return (+19.2% annualized return) in 30 days 
The cash now available in the Covered Calls Advisor Portfolio from the closing of these four positions will be retained until new Covered Calls and/or 100% Cash-Secured Puts positions are established.  Any new position(s) established with this available cash will be posted on this site on the same day the transactions occur.  

The remaining two positions (Devon Energy Corp. and Foot Locker Inc.) closed yesterday with their stock price below their strike prices, so those shares will remain in the Covered Calls Advisor Portfolio (see holdings in right sidebar) until they are either sold or a continuation covered calls position is established. 

The details for each of the closed positions is as follows:


1.  Pioneer Resources Co. -- 100% Cash-Secured Put Option Closed at Expiration
This position was established when the price of Pioneer Natural Resources was $156.93 (4.4% downside protection to the $150.00 strike price) and 36 days remaining until the July 21st options expiration date.

The implied volatility of the Put options was 27.8 when this position was established; so the $2.70 price received per share received when the Puts were sold is a nice premium to receive for these out-of-the-money Put options.    

The transactions were as follows:
06/16/2017  Sold 1 PXD July 21, 2017 $150.00 100% cash-secured Put option @ $2.70
07/21/2017 1 PXD Put option expired
Note: Price of PXD was $160.21 on July 21st options expiration date

The Covered Calls Advisor does not use margin, so the detailed information on this position and a potential result shown below reflect the fact that this position was established using 100% cash securitization for the Put option sold.

The overall performance result (including commissions) was as follows:
100% Cash-Secured Cost Basis: $15,000.00
= $150.00*100

Net Profit:
(a) Options Income: +$264.40
= ($2.70*100 shares) - $5.60 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (PXD was above $150.00 strike price at Jul2017 expiration): +$0.00
= ($150.00-$150.00)*100 shares

Total Net Profit: +$264.40
= (+$264.40 options income +$0.00 dividend income +$0.00 capital appreciation)

Absolute Return: +1.8%
= +$264.40/$15,000.00
Annualized Return: +17.9%
= (+$264.40/$15,000.00)*(365/36 days)


2. Quanta Services Inc. (PWR) -- Covered Calls Position Closed
The transactions have been as follows:
05/08/2017  Sold 6 PWR Jun2017 $33.00 100% cash-secured Put options @ $.65
Note: the price of PWR was $34.27 today when this transaction was executed.
06/16/2017 6 PWR Jun2017 Put options expired and 600 shares of PWR were purchased at $33.00 strike price
Note: the price of PWR was $32.10 upon the market close last Friday at Jun2017 expiration
06/19/2017 Sold 6 PWR July 21, 2017 $33.00 Call options @ $.55
Note: the price of PWR was $32.28 when these Call options were sold
07/21/2017 6 Call options in-the-money at expiration, so 600 shares of PWR were sold at $33.00 strike price
Note: the price of PWR was slightly in-the-money at $33.05 upon expiration

The performance result (including commissions) was as follows:
Cost Basis: $19,804.95
= $33.00*600 + $4.95 commission

Net Profit:
(a) Options Income: +$702.30
= ($.65 + $.55) *600 shares - 2*$8.85 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation: +$0.00
= ($33.00-$33.00)*600 shares

Total Net Profit (PWR stock was above $33.00 strike price at July 21, 2017 expiration): +$381.15
= (+$381.15 options income +$0.00 dividend income +$0.00 capital appreciation)

Absolute Return (PWR above $33.00 strike price at July 21, 2017 options expiration): +1.9%= +$381.15/$19,804.95
Annualized Return: +17.6%
= (+$381.15/$19,804.95)*(365/40 days)


3. Twenty-First Century Fox Inc. (FOXA) -- Covered Calls Position Closed
The transactions have been as follows:
05/08/2017  Sold 10 FOXA Jun2017 $28.00 100% cash-secured Put options @ $.65
Note: the price of FOXA stock was $28.88 today when this transaction was executed.
06/16/2017 10 FOXA Jun2017 Put options expired and 1,000 shares of FOXA were purchased at $28.00 strike price
Note: the price of FOXA was $27.45 upon the market close last Friday at Jun2017 expiration
06/19/2017 Sold 10 FOXA July 21, 2017 $27.00 Call options @ $1.25
Note: the price of FOXA was $27.76 when these Call options were sold
07/21/2017 10 FOXA Call options in-the-money at expiration, so 1,000 shares of FOXA were sold at $27.00 strike price
Note: the price of FOXA was at $27.84 upon expiration


The overall performance result (including commissions) was as follows:
100% Cash-Secured Cost Basis: $28,004.95
= $28.00*1,000 + $4.05 commission

Net Profit:
(a) Options Income: +$1,877.10
= ($.65 +$1.25) *1,000 shares - 2*$11.45 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (FOXA is above $27.00 strike price at July 21, 2017 expiration): -$1,000.00
= ($27.00-$28.00)*1,000 shares

Total Net Profit: +$877.10
= (+$1,877.10 options income +$0.00 dividend income -1,000.00 capital appreciation)

Absolute Return: +3.1%
= +$877.10/$28,004.95
Annualized Return: +15.4%
= (+$877.10/$28,004.95)*(365/74 days)


4. Voya Financial Inc. (VOYA) -- 100% Cash-Secured Puts Closed
This position was established when the price of Voya Financial Inc. was $35.04 (3.0% downside protection to the strike price) and 30 days remaining until the options expiration date.

The implied volatility of the Put options was 23.5 when this position was established; so the $.55 price received per share received when the Puts were sold is a nice premium to receive for these out-of-the-money Put options (i.e. strike price below the current stock price).    

The transaction was as follows:
06/22/2017  Sold 7 VOYA July 21, 2017 $34.00 100% cash-secured Put options @ $.55
Note: the price of VOYA was $35.04 today when this transaction was executed.
07/21/2017 7 VOYA Put options expired
Note: Price of VOYA was $37.58 on July 21st options expiration date

The Covered Calls Advisor does not use margin, so the detailed information on this position and a potential result shown below reflect the fact that this position was established using 100% cash securitization for the seven Put options sold.

A possible overall performance result (including commissions) would be as follows:
100% Cash-Secured Cost Basis: $23,800.00
= $34.00*700 shares

Net Profit:
(a) Options Income: +$375.50
= ($.55*700 shares) - $9.50 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (VOYA was above $34.00 strike price at July 21st expiration): +$0.00
= ($34.00-$34.00)*700 shares

Total Net Profit: +$375.50
= (+$375.50 options income +$0.00 dividend income +$0.00 capital appreciation)

Absolute Return : +1.6%
= +$375.50/$23,800.00
Annualized Return: +19.2%
= (+$375.50/$23,800.00)*(365/30 days)

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