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Monday, June 18, 2018

June 15th, 2018 Options Expiration Results

The Covered Calls Advisor Portfolio had five positions with June 15th, 2018 options expirations:
  • Three positions (Citigroup Inc., Metlife Inc., and U.S. Steel Corp.) closed with the stock price below the strike price so the Call options expired and the stocks currently remain in the Covered Calls Advisor Portfolio.  It is likely that Covered Calls positions will be maintained by selling July monthly Calls against these long stock positions within the next few days.  As always, these Covered Calls continuation transactions will be posted on this blog on the same day they occur.  
  • Two positions (Delta Air Lines Inc. and Sinclair Broadcast Group Inc.) closed at options expiration last Friday in-the-money, so those shares were assigned (sold) at their respective strike prices.
So far in 2018, twenty-nine of thirty-three positions (87.9%) were assigned profitably and at an average annualized return-on-investment of +27.3%.  This 87.9% year-to-date result exceeds the Covered Calls Advisor's overall long-term goal of having at least 67% of positions closed out at a profit.  None of the remaining four positions (Blackstone Group, Citigroup Inc., Metlife Inc., and U.S. Steel Corp.) have yet to be closed out, but instead currently remain as open positions in the Covered Calls Advisor Portfolio. 

For the two positions assigned at Friday's June 15th expiration, the average annualized return-on-investment was +5.4%.  The results for each position was:
  • Delta Air Lines Inc.:  +2.4% absolute return (+6.1% annualized return) in 143 days
  • Sinclair Broadcast Group Inc.:  +1.3% absolute return (+4.6% annualized return) in 100 days
The cash now available in the Covered Calls Advisor Portfolio from the closing of these two 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.  

To demonstrate how return-on-investment results for a closed Covered Calls position are calculated, the details for one of the two assigned positions (Delta Air Lines Inc.) is detailed below:


Delta Air Lines Inc. (DAL) -- Covered Calls Position Closed
The detailed transactions and calculations are as follows:
01/23/2018  Bought 400 Delta Air Lines Inc. shares @ $59.63
01/23/2018 Sold 4 DAL Mar 16, 2018 $57.50 Call options @ $3.48
Note: this was a simultaneous buy/write transaction.
02/21/2018 $.305 ex-dividend per share
03/16/2018 4 DAL Mar 16th $57.50 Call options expired
03/29/2018 Sold 4 DAL Apr 20, 2018 $57.50 Call options @ $.77 per share
Note: the price of DAL was $55.21 when these Call options were sold
04/20/2018 4 DAL Call options expired with stock price below strike price 
05/10/2018 $.305 ex-dividend per share
05/22/2018 Sold 4 DAL June 15, 2018 $55.00 Call options @ $1.17 to continue Delta Covered Calls position
Note: the price of Delta stock was $54.60 when these Calls were sold
06/15/2018 4 DAL Call options closed in-the-money and stock assigned at $55.00 strike price
Note: Closing price of DAL stock was $55.18 upon 6/15/2018 options expiration.

The overall performance result (including commissions) was as follows:
Cost Basis Purchase of 400 shares DAL: $22,467.63
= ($59.63 -$3.48)*400 shares + $7.63 commissions

Net Profit Components:
(a) Options Income: +$2,152.74
= ($3.48 + $.77 + $1.17) *400 shares - 2*$7.63 commissions
(b) Dividend Income: $244.00
= $.305 per share x 400 shares x 2 dividend payments
(c) Capital Appreciation (DAL stock closed above $55.00 strike price at expiration) : -$1,856.95
= ($55.00 -$59.63)* 400 shares - $4.95 commission

Net Profit: +$539.79
= (+$2,152.74 options income +$244.00 dividend income -$1,856.95 capital appreciation)

Actual Return-on-Investment Results:

Absolute Return : +2.4%
= +$539.79/$22,467.63
Equivalent Annualized Return: +6.1%
= (+$539.79/$22,467.63)*(365/143 days)

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