Closed Covered Call Position in Pioneer Natural Resources Company

This Covered Call position in Pioneer Natural Resources Company (ticker PXD) was established last Wednesday when the stock was purchased at $250.88.  Since then, the stock price had risen substantially in price and I decided to close out the position early.  I prefer to receive the majority of its maximum potential profit now (after only 5 days) rather than the uncertainty in this volatile market of holding the position for another full month (until its June 17th options expiration date).   

The return-on-investment results, as detailed below, are: +1.2% absolute return-on-investment (equivalent to +86.3% annualized-return-on-investment) for the 5 days this position was held.   

 

Pioneer Natural Resources Company (PXD) -- Closed Out Covered Call Position 

The buy/write transaction was as follows:
5/11/2022 Bought 100 shares of Pioneer Natural Resources @ $250.88 per share 
5/11/2022 Sold 1 PXD June 17th, 2022 $230.00 Call option @ $25.28 per share.  Note: the Implied Volatility of the Call option was 29.4 when this transaction was executed.
5/16/2022 Unwound (i.e. Closed out) Covered Call position in PXD by simultaneously selling the 100 shares and buying-to-close the one PXD 6/17/2022 $230.00 Call option at a net credit of $228.28 per share.  
 
The overall performance results (including commissions) was as follows:
Covered Call Cost Basis: $22,560.67
= ($250.88 - $25.28) * 100 shares + $.67 commission

Net Profit Components:
(a) Options Income: -$774.34
= ($25.28 - $33.01) * 100 shares - $1.34 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation: -$1,041.00
+($261.29 stock selling price - $250.88 stock purchase price) * 100 shares

 

Total Net Profit: +$266.66

= (-$774.34 option income +$0.00 dividend income +$1,041.00 capital appreciation)

 

Absolute Return-on-Investment: +1.2%

= +$266.66/$22,560.67

Annualized Return-on-Investment: +86.3%

= (+$266.66/$22,560.67) * (365/5 days)