Early Assignment of AT&T Inc. Covered Calls

Early this morning I received email and text notifications from my broker (Schwab) that all 4 AT&T Inc. (ticker symbol T) Call options were exercised early, so the 400 shares of AT&T Inc. stock in the Covered Calls Advisor Portfolio were assigned (i.e. sold) at the $27.00 strike price. 

Details of the transactions and the results for this AT&T position are provided below.  When this Covered Calls position was established, the time value (i.e. extrinsic value) was $.54 = [$3.33 options premium - ($29.79 stock price - $27.00 strike price).  By yesterday's market close (the last business day prior to the April 8th, 2020 ex-dividend date), the time value had declined to $0.29; so, the full $.54 options income profit per share potential was achieved upon the early assignment closing of this position.  The per share price had decreased slightly from $29.79 when the position was originally established (on March 30th) to $29.56 at yesterday's market close.  The owner of the Calls exercised their option to buy the shares at the $27.00 strike price in order to capture the $.52 dividend.  As detailed below, this early assignment provided an attractive return-on-investment (roi) result for the Covered Calls Advisor Portfolio of +2.0% absolute return (equivalent to +80.8% annualized roi for the 9 days this position was held. 

The Covered Calls Advisor will retain the cash received in the Covered Calls Advisor Portfolio until a new Covered Calls (or 100% Cash-Secured Puts) position is established.  As always, the transactions details will be posted on this blog site the same day that they occur.

The detailed results for this AT&T Inc. position are provided below.

AT&T Inc. (T) -- Covered Calls Position Closed

The transactions were:
03/30/2020 Bought 400 AT&T Inc. shares @ $29.79
03/30/2020 Sold 4 AT&T 4/17/2020 $27.00 Call options @ $3.33
Note: a simultaneous buy/write transaction was executed
04/07/2020 Early exercise of 4 AT&T April 17th, 2020 $27.00 Call options, so 400 AT&T shares assigned (i.e. sold) at the $27.00 strike price.

The overall performance results (including commissions) for this AT&T Inc. Covered Calls position were as follows:
Covered Calls Cost Basis: $10,591.63
= ($29.79 - $3.33) *400 shares + $7.63 commissions

Net Profit Components:
(a) Options Income: +$1,332.00
= ($3.33 *400 shares)
(b) Dividend Income (AT&T options exercised early on Apr 7th, the business day prior to Apr 8th ex-div date): +$0.00

(c) Capital Appreciation (AT&T assigned early on April 7th): -$1,116.00
+($27.00 - $29.79) *400 shares

Total Net Profit: +$216.00

= (+$1,332.00 options income +$0.00 dividend income -$1,116.00 capital appreciation)

Absolute Return: +2.0%

= +$216.00/$10,591.63

Annualized Return (If option exercised early): +80.8%

= (+$216.00/$10,591.63)*(365/9 days)