During this past month, the Covered Calls Advisor Portfolio held a total of twelve Covered Calls positions. Nine positions were closed out at a profit, two positions were closed out at a loss, and one position expired out-of-the-money on yesterday's October 21st monthly options expiration date.
The specific results for each position are summarized as follows:
- Three Covered Calls positions expired in-the-money (stock price above the strike price) on the October 21st, 2022 monthly options expiration date with the following results:
- General Motors Companny (GM) -- +2.0% absolute return in 16 days (equivalent to a +44.6% annualized return-on-investment).
- Energy Select Sector ETF (XLE) -- +2.2% absolute return in 38 days (equivalent to a +20.9% annualized return-on-investment).
- Qualcomm Inc. (QCOM) -- +1.8% absolute return in 15 days (equivalent to a +43.7% annualized return-on-investment). This position is a good example of how Covered Calls make it possible to achieve profitability despite a declining stock price by selling Calls at in-the-money strike prices. Qualcomm stock declined from a purchase price of $121.77 to $115.74 (a -5.0% decline) on yesterday's options expiration date. But since an in-the-money ($115.00) strike price was selected, the stock was assigned at expiration yesterday at a +1.8% absolute return-on-investment.
- One Covered Calls position in Suncor Energy expired in-the-money during the past month on its Weekly options expiration date and was therefore assigned at a +0.6% absolute return in 44 days (equivalent to a +5.0% annualized return-on-investment).
- One Covered Call position in JPMorgan Chase & Co. was closed out by early assignment on the day prior to its ex-dividend date for a +1.2% absolute return in 12 days (equivalent to a +37.4% annualized return-on-investment).
- Six Covered Calls positions were closed early based on my decision at that time to close out the positions with the following results:
- Abbvie Inc. (ABBV) -- +1.2% absolute return in 13 days (equivalent to a +33.8% annualized return-on-investment).
- Applied Materials Inc. (AMAT) -- -7.1% absolute return in 37 days (equivalent to a -69.8% annualized return-on-investment).
- Best Buy Inc. (BBY) -- -7.7% absolute return in 18 days (equivalent to a -156.9% annualized return-on-investment).
- Caterpillar Inc. (CAT) -- +1.7%
absolute return in 7 days (equivalent to a +88.4% annualized
return-on-investment).
- Cleveland-Cliffs Inc. (CLF) -- +3.4% absolute return in 22 days (equivalent to a +56.3% annualized return-on-investment).
- Meta Platforms Inc. (META) -- +0.8% absolute return in 20 days (equivalent to a +14.5% annualized return-on-investment).
- One Covered Calls positions in Medtronic PLC expired out-of-the-money on yesterday's October 21st, 2022 options expiration date. These 200 MDT shares remain in the Covered Calls Advisor Portfolio and are currently held at a small unrealized loss. Early next week, a decision will be made to either sell these shares or to continue this Covered Calls positions by selling future Call options against the shares currently held.
During the past year (last 12 months) 113 of 123 positions (91.9%) 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 +21.7% during the past year and the average holding period for these 123 closed positions was 23.0 days. In comparison, the benchmark S&P 500 returned -17.8% during the same prior one-year period.
As demonstrated by these past year's results, the Covered Calls strategy can be extraordinarily beneficial during Bearish time periods such as we have experienced during the past year, and especially by selling moderately 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. +21.7% versus -17.8%) 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".
Investing Words of Wisdom from a legendary investor: "For those properly prepared in advance, a bear market in stocks is not a calamity but an opportunity." -- John Templeton
This Covered Calls Advisor blog is freely available to anyone interested in learning about implementing a successful Covered Calls investing strategy. As always, I also encourage you to email me at partlow@cox.net any time you would like my feedback on your comments or questions on anything related to the Covered Calls investing strategy.
Best Wishes and Godspeed,
Jeff Partlow
Covered Calls Advisor
partlow@cox.net
