This early exercise (on the day prior to Comcast's ex-dividend date) of the four Call options was expected by the Covered Calls Advisor since these Call options had no remaining time value at yesterday's close--so the owners of the Call options elected to purchase the 400 shares at the $45.00 strike price and thus also capture today's $.27 per share ex-dividend. Despite not capturing today's dividend, this is a desirable outcome for the Covered Calls Advisor since the resulting +27.3% annualized return-on-investment (aroi) achieved slightly exceeds the +25.0% maximum potential aroi that might have been achieved on the April 14th options expiration date (if the stock remains above the $45.00 strike price on that expiration date).
The transactions and detailed results for this position are as follows:
Comcast Corporation (CMCSA) -- Early Assignment of this Covered Calls Position
The buy/write transaction was as follows:
03/23/2022 Bought 400 shares of Comcast Corporation @ $46.60 per share
03/23/2022 Sold 4 Comcast April 14th, 2022 $45.00 Call options @ $2.04 per share. The Implied Volatility of these Call options was 23.2 when this transaction was executed.
04/5/2022 Four Comcast 4/14/2022 $45.00 Calls were exercised early (on the day prior to the 4/5/2022 ex-dividend date), so the Calls expired and the 400 Comcast shares were sold at the $45.00 strike price.
The overall performance results (including commissions) were as follows:
Covered Calls Cost Basis: $17,826.68
= ($46.60 - $2.04) * 400 shares + $2.68 commission
Net Profit Components:
(a) Options Income: +$813.32
= ($2.04 * 400 shares) - $2.68 commission
(b) Dividend Income (Comcast shares assigned on day prior to ex-dividend date): +$0.00
(c) Capital Appreciation (Early Assignment): -$640.00
= ($45.00 sale price - $46.60 purchase price) * 400 shares
Total Net Profit (Comcast shares assigned early): +$173.32
= (+$813.32 options income +$0.00 dividend income -$640.00 capital appreciation)
Absolute Return-on-Investment: +1.0%
= +$173.32/$17,826.68
Equivalent Annualized Return-on-Investment: +27.3%
= (+$173.32/$17,826.68) * (365/13 days)
