During this past month, the Covered Calls Advisor Portfolio held a total of twelve Covered Calls positions. Ten positions were closed out at a profit and two are continuing positions that expired out-of-the-money on yesterday's September 16th monthly options expiration date. These results demonstrate the potential benefit of establishing in-the-money Covered Calls positions during a bearish market. During this past month, the benchmark S&P 500 (SPY) declined by -8.3%--but all ten closed positions in the Covered Calls Advisor Portfolio were closed out at a profit.
The specific results for each position are summarized as follows:
- Four Covered Calls positions expired in-the-money (stock price above the strike price) on their September 16th, 2022 monthly options expiration date with the following results:
- Discover Financial Services (DFS) -- +1.3% absolute return in 38 days (equivalent to +12.1% annualized return-on-investment).
- Goldman Sachs Group (GS) -- +1.6% absolute return in 19 days (equivalent to +30.1% annualized return-on-investment).
- Moderna Inc. (MRNA) -- +3.6% absolute return in 24 days (equivalent to +54.7% annualized return-on-investment).
- Mosaic Inc. (MOS) -- +1.9% absolute return in 10 days (equivalent to +67.9% annualized return-on-investment).
- Four Covered Calls positions expired in-the-money and were therefore closed out during the past month on their Weekly options expiration dates with the following results:
- Bank of America Corporation (BAC) -- +1.7% absolute return in 19 days (equivalent to +32.7% annualized return-on-investment).
- Cleveland-Cliffs Inc. (CLF) -- +1.5% absolute return in 15 days (equivalent to +37.3% annualized return-on-investment).
- FedEx Corporation (FDX) -- +1.1% absolute return in 11 days (equivalent to +37.8% annualized return-on-investment).
- iShares China Large-Cap ETF (FXI) -- +2.2% absolute return in 15 days (equivalent to +37.3% annualized return-on-investment).
- Two Covered Calls positions were closed early based on a decision at that time by the Covered Calls Advisor to close out the positions. Both positions were profitable positions as follows:
- MGM Resorts International (MGM) -- +1.6% absolute return in 20 days (equivalent to +28.8% annualized return-on-investment).
- Qualcomm Inc. (QCOM) -- +1.0%
absolute return in 20 days (equivalent to +19.1% annualized
return-on-investment).
- Two Covered Calls positions in Applied Materials Inc. and Suncor Energy Inc. expired out-of-the-money on yesterday's Sept 16th options expiration date. In each case, the shares remain in the Covered Calls Advisor Portfolio and are currently held at an unrealized loss. These positions are shown in the right sidebar of this blog. Early next week, decisions will be made to either sell these shares or to continue these Covered Calls positions by selling future Call options against the shares currently held.
During the past year (last 12 months) 118 of 128 positions (92.2%) in the Covered Calls Advisor Portfolio (CCAP) were closed out at a profit. The Covered Calls Advisor Portfolio weighted average annualized-return-on-investment (aroi) was +23.6% during the past year and the average holding period for these 128 closed positions was 22.5 days. In comparison, the benchmark S&P 500 returned -13.8% during the same prior one-year period. As demonstrated by these past year's results, the Covered Calls strategy can be exceptionally beneficial during Bearish time periods such as we have experienced during the past year, and especially by selling in-the-money strike prices to provide added downside protection in bearish markets. However, be advised that these return-on-investment results by the Covered Calls Advisor Portfolio above that of the benchmark S&P 500 (i.e. +23.6% versus -13.8%) substantially exceeds that which would normally be expected over a period of several years using the Covered Calls investing strategy. As indicated in this post made last year on this blog site (Link) -- "by exploiting our Covered Calls investing "edges", we can expect to achieve (over a period of several years) an average annualized-return-on-investment above the S&P 500 benchmark index of at least 3 to 5 percentage points on an annualized-return-on-investment basis". If you haven't carefully read the linked article above recently, please do so and think about how you can apply all of these twelve "edges" to your own Covered Calls investing.
This Covered Calls Advisor blog is a free service available to anyone interested in learning about implementing a successful Covered Calls investing strategy. As always, I welcome your emails to partlow@cox.net with any comments or questions related to this post or anything related to Covered Calls investing.
Best Wishes and Godspeed,
Jeff Partlow
Covered Calls Advisor
partlow@cox.net
