Roll Up Goldman Sachs Group Covered Call Position

Last Friday, the Covered Calls Advisor established a Covered Call position in Goldman Sachs at the June 16th, 2020 $170.00 strike price.  The price of the 100 Goldman Sachs shares has spiked higher from the purchase price of $178.10 last Friday to $202.10 this morning when this roll up transaction was executed.  The $1.25 quarterly ex-dividend date is this Friday and there was only $.35 time value remaining in the June 16th $170.00 Call options.  The Covered Calls Advisor wants to retain a Covered Calls position and capture the dividend, so a decision was made to roll up from the $170.00 strike to the $190.00 strike at the same June 19th, 2020 options expiration date and this vertical debit spread was executed at a net debit of $17.51 ($32.86 - $15.35) per share. 

A potential return-on-investment result for this Goldman Sachs Covered Call position is +4.6% absolute return in 29 days (equivalent to a +58.3% annualized return-on-investment) if the stock price closes above the $190.00 strike price on the June 19th options expiration date.  By rolling up the original Covered Call, this result would exceed the +3.1% absolute return (+39.5% annualized) that was the maximum potential of the original Covered Calls position at the $170.00 strike price.

The detailed transactions and a potential result are provided below.   

Goldman Sachs Group (GS) -- Continuation of Covered Call Position

The buy/write transaction was as follows:
05/22/2020 Bought 100 shares of Goldman Sachs stock @ $178.10 per share 
05/22/2020 Sold 1 June 19th, 2020 $170.00 Call option @ $12.06 per share
Note: The Open Interest in these Calls was 991 contracts and the Implied Volatility was 38.4.
05/27/2020 Roll up transaction executed:
Bought-to-Close 1 GS 6/19/2020 $170.00 Call option @ $32.86 per share and simultaneously Sold-to-Open 1 GS 6/19/2020 $190.00 Call option @ $15.35 per share
Note: The estimated probability that the $190.00 Call option closes in-the-money on the options expiration date was 72.6% when this roll up transaction was executed.
05/29/2020 Upcoming quarterly ex-dividend of $1.25 per share



A possible overall performance result (including commissions) would be as follows:
Covered Calls Cost Basis: $16,604.67
= ($178.10 - $12.06) * 100 shares + $.67 commission

Net Profit Components:
(a) Options Income: -$546.34
= ($12.06 - $32.86 + $15.35) * 100 shares - $1.34 commission
(b) Dividend Income: +$125.00
= $1.25 per share x 100 shares 
(c) Capital Appreciation (If GS stock is above $190.00 strike price at the June 19th expiration): +$1,190.00
= ($190.00 - $178.10) * 100 shares

Total Net Profit: +$768.66
= (-$546.34 options income +$125.00 dividend income +$1,190.00 capital appreciation)

Absolute Return: +4.6%
= +$768.66/$16,604.67
Equivalent Annualized Return: +58.3%
= (+$768.66/$16,604.67)*(365/29 days)