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Sunday, August 20, 2017

August 2017 Options Expiration Results

The Covered Calls Advisor Portfolio had seven positions with August 18, 2017 options expirations.  One position (Intel) had an early assignment on the day prior to the ex-dividend date and the results from that position were described here: Link

Of the total seven positions, the remaining six were held until Friday's August 18th expiration.  Of these, three positions (Alibaba Group Holding Ltd., Express Scripts Holding Co., and Micron Technology Inc.) closed in-the-money, so the maximum possible return-on-investment result was achieved for each of these positions:
  • Alibaba Group Holding Ltd.:  +1.2% absolute return (+26.3% annualized return) in 17 days
  • Express Scripts Holding Co.:  +1.0% absolute return (+15.5% annualized return) in 23 days  
  • Micron Technology Inc.+2.5% absolute return (+41.7% annualized return) in 22 days
The cash now available in the Covered Calls Advisor Portfolio from the closing of these three 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 three positions (Delta Air Lines Inc., Devon Energy Corp., and Range Resources Corp.) 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 either the stock is sold or a continuation covered calls position is established. 

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

1.  Alibaba Group Holding Ltd. (BABA) -- Covered Calls Position Closed 
The transactions were as follows:
08/02/2017  Bought 200 Alibaba shares @ $150.61
08/02/2017 Sold 2 BABA August 18, 2017 $140.00 Call options @ $12.33
Note: this was a simultaneous Buy/Write transaction
08/18/2017 200 BABA shares sold at $140 strike price at Aug 18th options expiration  

The overall performance result (including commissions) was as follows:
Cost Basis: $27,662.29
= ($150.61 -$12.33) * 200 shares + $6.29 commission

Net Profit:
(a) Options Income: +$2,466.00
= ($12.33 *200 shares)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (BABA was above $140.00 strike price at August 18, 2017 expiration): -$2,126.95
= ($140.00-$150.61)*200 shares - $4.95

Total Net Profit: +$339.05
= (+$2,466.00 options income +$0.00 dividend income -$2,126.95 capital appreciation)

Absolute Return: +1.2%
= +$339.05/$27,662.29
Annualized Return: +26.3%
= (+$339.05/$27,662.29)*(365/17 days)


2. Express Scripts Holding Co. (ESRX) -- Covered Calls Position Closed
The transactions were as follows:
07/27/2017  Bought 400 Express Scripts Holding Co. shares @ $62.47
07/27/2017 Sold 4 ESRX Aug 18, 2017 $60.00 Call options @ $3.07
Note: this was a simultaneous buy/write transaction.
08/18/2017 400 ESRX shares sold at $60.00 strike price at Aug 18th options expiration

The overall performance result (including commissions) was as follows:
Cost Basis: $23,767.55
= ($62.47 - $3.07) *400 shares + $7.55 commissions

Net Profit:
(a) Options Income: +$1,225.32
= ($3.07*400 shares) - $2.68 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (ESRX is above $60.00 strike price at Aug 18th expiration): -$992.95
= ($60.00-$62.47)*400 shares - $4.95 commissions

Total Net Profit (ESRX was above $60.00 strike price at Aug 18, 2017 options expiration): +$232.37
= (+$1,225.32 options income +$0.00 dividends -$992.95 capital appreciation)

Absolute Return: +1.0%
= +$232.37/$23,767.55
Annualized Return: +15.5%
= (+$232.37/$23,767.55)*(365/23 days)


3. Micron Technology Inc. (MU) -- 100% Cash-Secured Put Options Position Closed
The transactions were as follows:
07/28/2017  Sold 10 MU Aug 18, 2017 $28.00 100% cash-secured Put options @ $.71
Note: the price of Micron's stock was $29.15 today when this transaction was executed.
08/18/2017 10 MU Put options expired since price of stock was above strike price on the 8/18/2017 expiration date

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

The overall performance result (including commissions) was as follows:
100% Cash-Secured Cost Basis: $28,004.95
= $28.00*1,000 shares + $4.95 commission

Net Profit:
(a) Options Income: +$703.30
= ($.71*1,000 shares) - $6.70 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (Micron Technology Inc. was above $28.00 strike price at August 18th expiration): +$0.00
= ($28.00-$28.00)*1,000 shares

Total Net Profit: +$703.30
= (+$703.30 options income +$0.00 dividend income +$0.00 capital appreciation)

Absolute Return: +2.5%
= +$703.30/$28,004.95
Annualized Return: +41.7%
= (+$703.30/$28,004.95)*(365/22 days)