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Saturday, August 26, 2017

August 25th Expiration Result -- Applied Materials Position Closed

The Covered Calls Advisor Portfolio (CCAP) contained one position (Applied Materials Inc.) with an August 25th, 2017 options expiration.  The five Call options expired in-the-money so the maximum potential return-on-investment (ROI) result of  +2.5% absolute return (equivalent to +100.3% annualized return for the 9 days holding period) was achieved. 


Applied Materials Inc. -- Covered Calls Position Closed
The transactions were:
08/17/2017 Bought 500 AMAT shares @ $43.60
08/17/2017 Sold 5 AMAT Aug 25, 2017 $43.00 Call options @ $1.55
Note: a simultaneous buy/write transaction was executed.
08/22/2017 Quarterly ex-dividend of $.10 per share
08/25/20175 AMAT Call options expired in-the-money so the 500 AMAT shares were sold at the $43.00 strike price
Note: the price of AMAT shares was $43.31 at yesterday's options expiration (at market close)

The overall performance result (including commissions) for this Applied Materials covered calls position was:
Covered Calls Position Cost Basis: $21,033.30
= ($43.60 stock price -$1.55 options price) *500 shares +$8.30 commissions

Net Profit:
(a) Options Income: +$775.00
= ($1.55*500 shares)
(b) Dividend Income ($.10 per share ex-dividend on 8/22/2017): +$50.00
= ($.10 dividend per share x 500 shares)
(c) Capital Appreciation (AMAT assigned at $43.00 strike price at Aug 25th options expiration): -$304.95
= ($43.00-$43.60)*500 shares - $4.95 commissions

Total Net Profit: +$520.05
= (+$775.00 options income +$50.00 dividend income -$304.95 capital appreciation)

Absolute Return: +2.5%
= +$520.05/$21,033.30
Annualized Return on Investment: +100.3%
= (+$520.05/$21,033.30)*(365/9 days)

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