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Monday, December 18, 2017

Covered Calls Positions Continued in Alibaba and General Motors

Last Friday, the December 15th, 2017 Covered Calls positions in Alibaba Group Holding Ltd. (ticker symbol BABA) and General Motors Co. (ticker GM) expired with the stock prices below their strike prices.  So, their Call options expired and their stock shares were retained in the Covered Calls Advisor's Portfolio.  This morning, the Covered Calls Advisor continued both Covered Calls positions by selling January 19th, 2018 Call options against both long stock positions.

Some potential return-on-investment results for each position are: 
  • Alibaba Group Holding -- A +4.5% absolute return in 72 days (equivalent to a +22.6%  annualized return if Alibaba stock closes above the $170.00 strike price on the January 19th, 2018 expiration date.
  • General Motors Co. -- A +2.1% absolute return in 54 days (equivalent to a +14.3% annualized return if GM stock is above the $42.00 strike price on the January 19th expiration date.
The transactions to-date and potential return-on-investment results for both positions are detailed below. 

1. Alibaba Group Holding (BABA) -- Covered Calls Position Continued
The transactions were as follows:
11/09/2017 Bought 300 shares of Alibaba stock @ $182.08 per share 
11/09/2017 Sold 3 Alibaba December 15th, 2017 $175.00 Call options @ $11.28 per share
Note: this was a simultaneous Buy/Write transaction
12/15/2017 3 Dec 15th, 2017 Call options expired
12/18/2017 Sold 3 BABA Jan 19th, 2018 $170.00 Call options @ $8.45 per share
Note: the price of Alibaba was $174.15 when these Calls were sold

A possible overall performance result (including commissions) would be as follows:
Covered Calls Cost Basis: $51,246.96
= ($182.08 - $11.28)* 300 shares + $6.96 commission

Net Profit Components:
(a) Options Income: +$5,912.04
= ($11.28 + $8.45) * 300 shares - $6.96 commission
(b) Dividend Income: +$0.00 
(c) Capital Appreciation (If BABA stock is above $170.00 strike price at Jan. 19th expiration): -$3,628.95
= ($170.00 -$182.08)* 300 shares - $4.95 commission

Total Net Profit: +$2,283.09
= (+$5,912.04 options income +$0.00 dividend income -$3,628.95 capital appreciation)

Absolute Return: +4.5%
= +$2,283.09/$51,246.96
Equivalent Annualized Return: +22.6%
= (+$1,155.05/$51,246.96)*(365/72 days)


2. General Motors Co. (GM) -- Covered Calls Position Continued
The transactions were as follows:
11/27/2017 Bought 500 shares of GM stock @ $44.20 per share 
11/27/2017 Sold 5 GM December 15th, 2017 $43.00 Call options @ $1.65 per share
Note: this was a simultaneous Buy/Write transaction
12/07/2017 Ex-dividend of $.38 per share
12/15/2017 5 Call options expired
12/18/2017 Sold 5 GM Jan 19th, 2018 $42.00 Call options @ $1.10 per share
Note: the price of GM was $41.92 when these Calls were sold


A possible overall performance result (including commissions) would be as follows:
Covered Calls Cost Basis: $21,283.30
= ($44.20 - $1.65)* 500 shares + $8.30 commission

Net Profit Components:
(a) Options Income: +$1,366.70
= ($1.65 + $1.10)* 500 shares - $8.30
(b) Dividend Income: +$190.00
 = $.38 * 500 shares 
(c) Capital Appreciation (If GM stock is above $42.00 strike price at Jan. 19th expiration): -$1,104.95
= ($42.00 -$44.20)* 500 shares - $4.95 commission

Total Net Profit: +$451.75
= (+$1,366.70 options income +$190.00 dividend income -$1,104.95 capital appreciation)

Absolute Return: +2.1%
= +$451.75/$21,283.30
Equivalent Annualized Return: +14.3%
= (+$451.75/$21,283.30)*(365/54 days)

2 comments:

  1. I had the GM $43.5 that expired. Gonna see if it can rise up to 43ish this week before selling a Jan call.

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  2. Well - I decided to execute it today. I sold a 43.5 Jan call for $0.75. My B/E is now ~$41.75. I don't have any other open CC positions. I do have 1 Feb Bull Put Spread on the RUT. I will close that @ 50% max profit or 30 days before expiration...which ever comes first.

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