At last Friday's options expiration, four September 2nd, 2022 Covered Calls in MGM Resorts International (ticker MGM) expired with the stock price slightly below the $33.00 strike price, so the Calls expired and the 400 shares of MGM remained in the Covered Calls Advisor Portfolio. I decided to close this position, so soon after this morning's market open, I closed this MGM Resorts position by selling the 400 shares at a market price of $33.00 per share.
The return-on-investment results for this MGM Resorts International position was: +1.6% absolute
return in 20 days (equivalent to a +28.8% annualized
return-on-investment).
This Covered Calls position demonstrates the benefit of selling moderately in-the-money Covered Calls in bearish markets. This MGM stock price declined by 6.3% since its original purchase price just 20 days ago, however an attractive return-on-investment result was still achieved--as detailed below.
The original Buy/Write limit order was executed as follows:
8/17/2022 Bought 400 shares of MGM Resorts stock @ $35.21 per share
8/17/2022 Sold 4 MGM September 2nd, 2022 $33.00 Call options @ $2.73 per share
09/02/2022 Two MGM Calls closed slightly below the $33.00 strike price @ $32.64 per share, so the 4 MGM Call options expired and 400 MGM Resorts shares remained in the Covered Calls Advisor Portfolio.
09/06/2022 Closed out this MGM Resorts International Covered Calls position by selling 400 shares was @ $33.00 early this morning.
The overall performance results (including commissions) for this MGM Resorts International Covered Calls position were as follows:
Stock Purchase Cost Basis: $12,994.68
= ($35.21 - $2.73) * 400 shares + $2.68 commission
Net Profit Components:
(a) Options Income: +$1,089.32
= ($2.73 * 400 shares) - $1.34 commission
(b) Dividend Income: +$0.00
(c) Capital Appreciation (400 MGM shares sold at $33.00 per share): -$884.00
= (+$33.00 sale price - $35.21 original stock price) * 400 shares
Jeff Partlow (The Covered Calls Advisor)
partlow@cox.net
