On December 20th, 2021, a Covered Calls position was established in JPMorgan Chase & Co. (JPM) with a January 21st, 2022 options expiration date. Two hundred shares of JPMorgan stock were purchased at $152.37 and two January 21st, 2022 Call options were sold at $9.53 per share. JPM's price had risen to $159.54 today when the Covered Calls Advisor's net credit limit order to unwind (i.e. close out) this Covered Calls position at $144.76 was executed. The original time value in this Covered Calls position was $2.16 per share [$9.53 options premium - ($152.37 stock price - $145.00 strike price)]. Along with the stock price increase, the accompanying remaining time value in the Calls had declined from their original $2.16 to only $.24 per share ($145.00 strike price - $144.76 net credit Covered Calls unwind price).
Since the stock has been on a price uptrend since this position was established and with only $.24 time value remaining in the Call options this morning, I decided to close out the position and secure an annualized return-on-investment (aroi) of +60.9% since this outcome exceeded: (1) the potential +34.4% aroi that might have been achieved from early assignment on the day prior to the $1.00 ex-dividend next Wednesday; or (2) the +24.4% aroi if not assigned early on the day prior to next week's ex-dividend but instead assigned at the January 21st, 2022 options expiration date.
JPMorgan Chase & Co. (JPM) -- Covered Calls Position Closed Out
12/20/2021 Bought 200 JPM shares @ $152.37
12/20/2021 Sold 2 JPM 1/21/2022 $145.00 Call options @ $9.53 per share
12/28/2021 Unwound JPM Covered Calls position by simultaneously Selling-to-Close 200 JPM shares at $159.54 and Buying-to-Close the 2 JPM January 21st, 2022 $145.00 Call options at a net credit of $144.76 per share.
The overall performance results (including commissions) for this JPM Covered Calls position were as follows:
Stock Purchase Cost: $28,569.34
= ($152.37 - $9.53) *200 shares + $1.34 commission
Net Profit:
(a) Options Income: -$1,052.68
= ($9.53 -$14.78) *200 shares - $2.68 commission
(b) Dividend Income: +$0.00
+($159.54 -$152.37) * 200 shares
Total Net Profit: +$381.32
