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Saturday, December 16, 2017

December 15th, 2017 Options Expiration Results

The Covered Calls Advisor Portfolio had fifteen positions with December 15th 2017 options expirations.  Five positions (2 positions in Bank of America, Best Buy, Devon Energy, and Schlumberger) had early assignments (on the day prior to the ex-dividend date in each instance) and the financial results from those positions were posted on this blog the same day they occurred.

Of the total fifteen positions, the remaining ten positions were held until yesterday's December 15th expiration.  Of these, eight positions (Blackstone Group LP, Citgroup Inc., The Coca-Cola Company, Delta Air Lines Inc., Devon Energy Corp., Freeport McMoRan Inc., Lam Research Corp., and Sinclair Broadcast Group Inc.) closed in-the-money, so the maximum possible return-on-investment result was achieved for each of these positions:
  • Blackstone Group LP:  +1.7% absolute return (+17.3% annualized return) in 36 days
  • Citigroup Inc.:  +2.9% absolute return (+20.0% annualized return) in 53 days  
  • The Coca-Cola Company:  +1.4% absolute return (+17.7% annualized return) in 29 days
  • Delta Air Lines Inc.:  +2.2% absolute return (+22.7% annualized return) in 36 days
  • Devon Energy Corp.:  +12.8% absolute return (+22.9% annualized return) in 204 days  
  • Freeport McMoRan Inc.:  +6.2% absolute return (+53.6% annualized return) in 42 days
  • Lam Research Corp.:  +1.8% absolute return (+38.3% annualized return) in 17 days
  • Sinclair Broadcast Group:  +1.9% absolute return (+37.8% annualized return) in 18 days
The cash now available in the Covered Calls Advisor Portfolio from the closing of these eight 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 (Alibaba and General Motors) 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 continuation Covered Calls positions are established. 

To show how return-on-investment results for a closed Covered Calls position are calculated, the details for one of the eight assigned positions (Blackstone Group LP) is provided here:

Blackstone Group L.P. (BX) -- Covered Calls Position Closed
The implied volatility of the Call options was 25.2 when this position was established.  There weree no ex-dividend dates or earnings reports prior to the December 15th options expiration date.

The transactions were as follows:
11/10/2017 Bought 500 shares of Blackstone Group stock @ $31.96 per share 
11/10/2017 Sold 5 BX December 15th, 2017 $31.00 Call options @ $1.49 per share
12/15/2017 Blackstone Group stock closed at $31.41 (above $31.00 strike price) at expiration, so 5 Call options expired and 500 shares of BX stock owned were sold at $31.00

The overall performance result (including commissions) was as follows:
Covered Calls Cost Basis: $15,243.30
= ($31.96 - $1.49)* 500 shares + $8.30 commissions

Net Profit Components:
(a) Options Income: +$745.00
= ($1.49* 500 shares)
(b) Dividend Income: +$0.00 
(c) Capital Appreciation (BX stock assigned at $31.00 strike price at Dec 15th expiration): -$484.95
= ($31.00 -$31.96)* 500 shares - $4.95 commission

Total Net Profit: +$260.05
= (+$745.00 options income +$0.00 dividend income -$484.95 capital appreciation)

Absolute Return: +1.7%
= +$260.05/$15,243.30
Equivalent Annualized Return: +17.3%
= (+$260.05/$15,243.30)*(365/36 days)


  1. Thanks again for writing about these transactions. I wrote in the money covered calls based on your blog posts (about 80 % of the trades that you mentioned in this blog post) and worked very well.