As detailed below, two potential return-on-investment results are:
- -1.3% absolute return (equivalent to -16.0% annualized return for 29 days) if the stock price is unchanged from today's price of $14.71 on the Sept 3rd, 2021 options expiration date; OR
- +0.6% absolute return (equivalent to +8.0% annualized return for 29 days) if the stock is assigned at the $15.00 strike price on the Sept 3rd, 2021 options expiration date.
Cabot Oil and Gas Corp. (COG) -- Continuation of Covered Calls Position
The original buy/write transaction was as follows:
08/05/2021 Bought 600 Cabot shares @ $15.86
08/05/2021 Sold 6 COG 8/20/2021 $15.50 Call options @ $.61
Note: A simultaneous buy/write transaction was executed. The Implied Volatility of the Call options was 30.5 when this Covered Calls position was established.
08/11/2021 Quarterly ex-dividend of $.11 per share
08/20/2021 6 COG $15.50 Call options expired and 600 COG shares remain in the Covered Calls Advisor Portfolio
08/23/2021 Continued COG Covered Calls position by selling 6 Sept. 3rd, 2021 $15.00 Calls @ the sell-to-open limit order of $.25 per share when the stock price was $14.71, the bid/ask price was $.20/$.30, and the Implied Volatility of the Call options was 30.8.
Two possible overall performance results (including commissions) for this Cabot Oil and Gas Covered Calls position are as follows:
Covered Calls Cost Basis: $9,154.02
= ($15.86 - $.61) * 600 shares + $4.02 commissions
Net Profit Components:
(a) Options Income: +$507.96
= ($.61 + $.25) * 600 shares - $8.04 commissions
(b) Dividend Income: +$66.00
= ($.11 dividend per share x 600 shares)
(c) Capital Appreciation (If COG share price unchanged at $14.71 upon Sept. 3rd, 2021 options expiration): -$690.00
+($14.71 -$15.86) * 600 shares; OR
(c) Capital Appreciation (If COG share price above $15.00 strike price upon Sept. 3rd, 2021 options expiration, so 600 shares assigned at $15.00): -$516.00
+($15.00 -$15.86) * 600 shares
