Roll Down and Out Covered Calls Positions in Best Buy Inc. and iShares China Large-Cap ETF

Both the Best Buy Inc. and iShares China Large-Cap ETF Covered Calls positions had Friday, September 24th, 2021 expiration dates and the Calls were out-of-the-money for both positions. So, during the last 30 minutes of trading yesterday, the Covered Calls continued the Covered Calls positions in Best Buy Inc. (ticker BBY) and iShares China Large-Cap ETF (ticker FXI) were continued by selling down and out to October 15th, 2021 options expiration dates. against the shares held in the Covered Calls Advisor Portfolio. The 2 September, 24th $112.00 Best Buy Calls were Bought-to-Close at $.02 per share and 2 October 15th, 2021 $105.00 Calls were simultaneously Sold-to-Open at $2.50 per share. The 5 September, 24th $39.00 iShares China Large-Cap ETF Calls were Bought-to-Close at $.01 per share and 5 October 15th, 2021 $38.00 Calls were simultaneously Sold-to-Open at $1.21 per share. As detailed below, the potential return-on-investment results if assigned at their Oct. 15th options expiration are: 

• Best Buy Inc.:  -2.4% absolute return (equivalent to -20.2% annualized return for 43 days).
  

• iShares China Large-Cap ETF:  +1.6% absolute return (equivalent to +18.4% annualized return for 31 days).

1. Best Buy Inc. (BBY) -- Continuation of Covered Calls Position

The transactions were as follows:
9/03/2021 Bought 200 shares of Best Buy shares @ $115.05 per share 
9/03/2021 Sold 2 Best Buy September 24th, 2021 $112.00 Call options @ $4.25 per share
Note: this was a net debit limit simultaneous Buy/Write transaction
09/13/2021 Quarterly ex-dividend of $.70 per share
09/24/2021 Rolled 2 Calls down-and-out to the $105.00 at a net credit of $2.48 by simultaneously buying back to close the Sept. 24th $112.00 Calls and selling to open the Oct. 15th $105.00 Calls.  Note: the Best Buy stock price closed at $104.74 on Friday, Sept. 24th.

A possible overall performance result (including commissions) for this Best Buy Covered Calls position if assigned at expiration is:
Covered Calls Cost Basis: $22,161.34
= ($115.05 - $4.25) * 200 shares + $1.34 commissions

Net Profit Components:
(a) Options Income: +$1,343.32
= ($4.25 - $.02 +$2.50) * 200 shares - $2.68 commissions
(b) Dividend Income: +$140.00
= ($.70 dividend per share x 200 shares)
(c) Capital Appreciation (If Best Buy shares assigned at $105.00 strike price at options expiration): -$2,010.00
+($105.00 - $115.05) * 200 shares

Total Net Profit (If Best Buy shares assigned at $105.00 strike price at Oct. 15th, 2021 expiration): -$526.68

= (+$1,343.32 +$140.00 - $2,010.00)
 

Absolute Return-on-Investment (If BBY shares assigned at $105.00 strike price on Oct 15th, 2021 expiration): -2.4%

= -$526.68/$22,161.34

Annualized Return-on-Investment (If Best Buy stock assigned at $105.00 at Oct 15th, 2021 expiration): -20.2%

= (-$526.68/$22,161.34) *(365/43 days)

iShares China Large-Cap ETF (FXI) -- New Covered Calls Position 

The Buy/Write transaction was as follows:
09/15/2021 Bought 500 shares of iShares China Large-Cap ETF shares @ $39.8893 per share
09/15/2021 Sold 5 FXI Sept 24th, 2021 $39.00 Call options @ $1.28 per share
09/24/2021 Rolled 5 Calls down-and-out to the $38.00 at a net credit of $1.20 by simultaneously buying back to close the Sept. 24th $39.00 Calls and selling to open the five Oct. 15th $38.00 Calls.  Note: the FXI price closed at $38.24 on Friday, Sept. 24th.

 

A possible overall performance result (including commissions) for this iShares China Large-Cap ETF Covered Calls position is as follows:
Stock Purchase Cost: $19,308.00
= ($39.8893 - $1.28) * 500 shares + $3.35 commission

Net Profit:
(a) Options Income: +$1,246.70
= ($1.28 -$.01 + $1.21) * 500 shares - $6.70 commission
(b) Dividend Income: +$0.00

(c) Capital Appreciation (If 500 iShares China Large-Cap ETF shares assigned at $38.00 strike price at expiration) -$944.65
+($38.00 - $39.8893) * 500 shares

Total Net Profit (If 500 iShares China Large-Cap ETF shares assigned at $38.00 strike price at expiration): +$302.05

= (+$1,246.70 options income +$0.00 dividend income -$944.65 capital appreciation)

 

Absolute Return-on-Investment: +1.6%

= +$302.05/$19,308.00

Annualized Return-on-Investment: +18.4%

= (+$302.05/$19,308.00) * (365/31 days)