Closed Covered Calls Position in EOG Resources Inc.

Late in this afternoon's trading session, the Covered Calls Advisor decided to close out the Covered Calls position in EOG Resources Inc. (ticker EOG).  The three $69.50 Call options were expiring today (April 23rd, 2021), but with the stock slightly below the $69.50 strike price at $69.25, the Covered Calls Advisor closed the position rather than allowing the Calls to expire and therefore holding the 300 shares of EOG stock until Monday morning's opening. 

As detailed below, the return-on-investment result was +2.4% absolute return in 23 days (equivalent to a +37.5% annualized return-on-investment).

 

EOG Resources Inc.(EOG) -- Covered Calls Position Closed

The simultaneous buy/write transaction was as follows:
04/01/2021 Bought 300 shares of EOG Resources Inc. stock @ $73.02 per share 
04/01/2021 Sold 3 EOG April 23rd, 2021 $69.50 Call options @ $5.02 per share
Note: The options Implied Volatility was 33.2 when this buy/write transaction executed.
04/15/2021 Ex-dividend of $.4125 per share
04/23/2021 Closed out (i.e. unwound) the JPM Covered Calls position by Selling-to-Close 300 EOG shares @ $69.25 and Buying-to-Close the 3 EOG 4/23/2021 Call options @ $.04 per share. 

The overall performance results (including commissions) was as follows:
Covered Call Cost Basis: $20,402.01
= ($73.02 - $5.02) * 300 shares + $2.01 commission

Net Profit Components:
(a) Options Income: +$1,489.98
= ($5.02 -$.04) * 300 shares - $4.02 commissions
(b) Dividend Income (300 EOG shares went ex-dividend on 4/15/2021 @ $.4125 per share): +$123.75
= $.4125 per share x 300 shares
(c) Capital Appreciation (300 EOG shares sold at $69.25 per share): -$1,131.00
= ($69.25 strike price - $73.02 stock purchase price) * 300 shares

Net Profit (EOG Covered Calls closed out by Selling-to-Close 300 EOG shares @ $69.25 and Buying-to-Close the 3 EOG 4/23/2021 Call options @ $.04 per share): +$482.73
= (+$1,489.98 options income +$123.75 dividend income - $1,131.00 capital appreciation)

Absolute Return-on-Investment: +2.4%
= +$482.73/$20,402.01
Equivalent Annualized Return-on-Investment: +37.5%
= (+$482.73/$20,402.01)*(365/23 days)