Roll-Up-and-Out Micron Technology Inc. Covered Calls

When the 200 shares of Micron Technology Inc. (ticker symbol MU) were trading at $89.50 today and the existing Covered Calls position was for the February 26th, 2021 expiration and at the $80.00 strike price, the Covered Calls Advisor's net debit limit order at $2.50 per share ($9.70 Buy-to-Close the Feb. 26th Calls at the $80.00 strike minus $7.20 Sell-to-Open the March 19th expiration at the $85.00 strike price) was executed.  The 200 Micron shares were deep-in-the-money (11.9% above the $80.00 strike price) and the time value remaining in this Friday's (i.e. Feb. 26th) Call options was only $.20 [($9.70 bought-to-close Calls price - $9.50 Calls intrinsic value ($89.50 stock price - $80.00 strike price)], the Covered Calls Advisor 'Rolled' the Covered Calls position 'Up' to the $85.00 strike price and 'Out' to the March 19th, 2021 options expiration date. 

This remains a conservative in-the-money Covered Calls position since the Delta for these new Calls when this rollout transaction was executed was 68.1 which closely approximates the probability of assignment at options expiration (i.e. 68.1% probability).  Also as preferred by the Covered Calls Advisor, there is no quarterly earnings report for Micron prior to the new March 19thth, 2021 options expiration date since the next Micron earnings report is on March 31st, 2021.

As detailed below, a potential return-on-investment result for this Micron Technology Inc. position is +7.8% absolute return in 52 days (equivalent to a +54.5% annualized return-on-investment) if the stock closes above the $85.00 strike price at the March 19th options expiration.


Micron Technology Inc. (MU) -- Roll-Up-and-Out Covered Calls Position

The Buy/Write transaction was as follows:
01/27/2021 Bought 200 shares of Micron Technology Inc. stock @ $76.0865 per share 
01/27/2021 Sold 2 Micron Feb. 19th, 2021 $72.50 Call options @ $5.63 per share
02/11/2021 Roll-Up-and-Out transaction: Bought-to-Close 2 MU Feb. 19th, 2021 $72.50 Call options at $12.85 per share and simultaneously Sold-to-Open 2 MU Feb. 26th, 2021 $80.00 Calls at $6.30 per share. This roll-up-and-out transaction occurred at a net debit of $6.55 ($12.85 - $6.30) per share.  The price of Micron's stock was $85.24 when this net debit limit order was executed.
02/24/2021 Roll-Up-and-Out transaction: Bought-to-Close 2 MU Feb. 26th, 2021 $80.00 Call options at $9.70 per share and simultaneously Sold-to-Open 2 MU March 19th, 2021 $85.00 Calls at $7.20 per share. This roll-up-and-out transaction occurred at a net debit of $2.50 ($9.70 - $7.20) per share.  The price of Micron's stock was $89.50 when this net debit limit order was executed.

A possible overall performance result (including commissions) if the stock price is above the $85.00 strike price at expiration would be as follows:
Covered Call Cost Basis: $14,092.64
= ($76.0865 - $5.63) * 200 shares + $1.34 commission

Net Profit Components:
(a) Options Income: -$688.02
= ($5.63 - $12.85 + $6.30 -$9.70 +$7.20) * 200 shares - $4.02 commissions
(b) Dividend Income: +$0.00 
(c) Capital Appreciation (If Micron stock is above $85.00 strike price at the March 19th, 2021 options expiration): +$!,782.70
= ($85.00 - $76.0865) * 200 shares

Total Net Profit: +$1,094.68
= (-$688.02 options income +$0.00 dividend income + $1,782.70 capital appreciation)

Absolute Return: +7.8%
= +$1,094.68/$14,092.64
Equivalent Annualized Return: +54.5%
= (+$1,094.68/$14,092.64)*(365/52 days)