As detailed below, two potential return-on-investment results are: (1) - 3.6% absolute return (equivalent to -17.8% annualized return-on-investment for the 73 days holding period) if Cigna's price is unchanged at today's $256.47 price on the May 12th, 2023 expiration date; and (2) -0.5% absolute return (equivalent to -2.5% annualized return-on-investment for the 73 days holding period) if it is in-the-money (i.e. above the $265.00 strike price) on the May 12th options expiration date.
Cigna's next quarterly earnings report before market open on May 5th is prior to the May 12th options expiration date. Since I prefer not to hold positions in companies on their earnings reporting dates, I will make a decision whether or not to unwind (i.e. close out) this position prior to May 5th.
The Cigna Corporation (CI) -- Covered Call Position Continued by Rollout
The original buy/write transaction was as follows:
3/1/2023 Bought 100 Cigna Corp. shares @ $289.40
3/1/2023 Sold 1 Cigna 3/17/2023 $280.00 Call option @ $11.70
3/7/2023 Quarterly ex-dividend of $1.23 per share
3/17/2023 One Cigna Call option expired out-of-the-money and 100 shares remain in the Covered Calls Advisor Portfolio
3/21/2023
Continued Cigna Covered Call position by selling one March 31st,
2023 $27.50 Call option @ $4.10 per share. The stock price was $276.68
when this transaction was made.
3/31/2023 One Cigna Call option expired out-of-the-money and 100 shares remain in the Covered Calls Advisor Portfolio
4/3/2023
Continued Cigna Covered Call position by selling one April 21st,
2023 $270.00 Call option @ $2.50 per share. The stock price was $262.30
when this transaction was made and the Delta for this Call option was 29.9.
4/24/2023
Continued Cigna Covered Call position by selling one May 12th,
2023 $265.00 Call option @ $3.52 per share. The stock price was $256.47
when this transaction was made and the Delta for this Call option was 43.2.
Two possible overall performance results (including commissions) for this Cigna Covered Call position are as follows:
Covered Call Cost Basis: $27,770.67
= ($289.40 - $11.70) * 100 shares + $.67 commissions
Net Profit Components:
(a) Options Income: +$2,179.32
= ($11.70 + $4.10 + $2.50 + $3.52) * 100 shares - $2.68 commissions
(b) Dividend Income: +$123.00
= ($1.23 dividend per share x 100 shares)
(c) Capital Appreciation (If CI stock price unchanged at $256.47 on the May 12th options expiration date): -$3,293.00
+($256.47 - $289.40) * 100 shares; or
(c) Capital Appreciation (If Cigna shares assigned at $265.00 strike price at the 5/12/2023 options expiration): -$2,440.00
+($265.00 - $289.40) * 100 shares
