For Applied Materials, two September 30th, 2022 $91.00 Call options were sold at $2.42 per share against the 200 shares owned in the Covered Calls Advisor Portfolio when the stock price today was $89.40. For Suncor Energy, four October 7th, 2022 $31.00 Call options were sold at $1.00 per share against the 400 Suncor shares owned when the stock price was $30.47. The details of these Covered Calls positions so far are provided below including potential return-on-investment results.
1. Applied Materials Inc. -- Continuation of Covered Calls Position
The original $94.06 net debit buy/write limit order was transacted as follows:
08/24/2022 Bought 200 AMAT shares @ $100.76
08/24/2022 Sold 2 AMAT Sept. 2nd, 2022 $95.00 Call options @ $6.70 per share.
Note: as is often the case, these Call options were transacted slightly below the midpoint of the $6.65/$6.80 bid/ask spread.
9/2/2022 AMAT shares closed at $91.35, well below the $95.00 strike price, so the Calls expired and 200 AMAT shares remain in the Covered Calls Advisor Portfolio.
9/7/2022 Continued Applied Materials Covered Calls position by selling two Sept 16th, 2022 $92.50 Call options @ $2.30 per share. The stock price was $91.42 when this transaction was executed.
9/16/2022 Two AMAT Call options expired out-of-the-money and 200 AMAT shares remain in the Covered Calls Advisor Portfolio.
9/19/2022 Continued Applied Materials Covered Calls position by selling two Sept 30th, 2022 $91.00 Call options @ $2.42 per share.
A possible overall performance result (including commissions) would be as follows:
Covered Calls Net Investment: $18,813.34
= ($100.76 - $6.70) * 200 shares + $1.34 commission
Net Profit Components:
(a) Options Income: +$2,279.98
= ($6.70 + $2.30 + $2.42) * 200 shares - $4.02 commission
(b) Dividend Income: $0.00
(c) Capital Appreciation (If AMAT stock is above $91.00 strike price and therefore assigned on the Sept. 30th options expiration): -$1,952.00
= ($91.00 -$100.76) * 200 shares
Total Net Profit (If stock assigned on the September 30th options expiration date): +$327.98
= (+$2,279.98 options income +$0.00 dividend income -$1,952.00 capital appreciation)
Absolute Return-on-Investment (If stock assigned at $91.00 strike price on Sept 30th, 2022 options expiration date): +1.7%
= +$327.98/$18,813.34
Equivalent Annualized Return-on-Investment: +16.3%
= (+$327.98/$18,813.34) * (365/39 days)
2. Suncor Energy Inc. (SU) -- Continuation of Covered Calls Position
The original simultaneous buy/write transactions was as follows:
08/25/2022 Bought 400 shares of Suncor stock @ $34.77 per share
08/25/2022 Sold 4 Suncor Sept. 16th, 2022 $32.50 Call options @ $2.62 per share
09/01/2022 Ex-dividend at $.3573 per share
9/16/2022 Four Suncor Call options expired out-of-the-money and 400 Suncor shares remain in the Covered Calls Advisor Portfolio.
9/19/2022 Continued Suncor Covered Calls position by selling four October 7th, 2022 $31.00 Call options @ $1.00 per share.
A possible overall performance result (including commissions) would be as follows:
Covered Calls Net Investment: $12,865.36
= ($34.77 - $2.62) * 400 shares + $5.36 commission
Net Profit Components:
(a) Options Income: +$1,442.64
= ($2.62 + $1.00) * 400 shares - $5.36 commission
(b) Dividend Income: $142.92
= $.3573 per share x 400 shares
(c) Capital Appreciation (If Suncor stock is above $31.00 strike price and
therefore assigned on the Oct. 7th options expiration): -$1,508.00
= ($31.00 - $34.77) * 400 shares
Total Net Profit (If stock assigned on the October 7th options expiration date): +$77.56
= (+$1,442.64 options income +$142.92 dividend income -$1,508.00 capital appreciation)
Absolute Return-on-Investment (If stock assigned on the Oct. 7th, 2022 options expiration date): +0.6%
= +$77.56/$12,865.36
Equivalent Annualized Return-on-Investment: +5.0%
= (+$77.56/$12,865.36) * (365/44 days)
