The Covered Calls Advisor Portfolio has a Covered Call position in Microsoft Corporation (ticker MSFT) which expired last Friday (January 2nd, 2026). Today I decided to continue this position by rolling down-and-out from the $487.50 strike price to the January 16th, 2026 options expiration at the $485.00 strike price by selling-to-open one Call at $5.40 per share when Microsoft's stock price was $482.52.
As detailed below, a potential outcome for this Microsoft investment if the stock is in-the-money and therefore assigned on the January 16th, 2026 options expiration date is +0.2% absolute return-on-investment over 78 days (equivalent to +1.1% annualized-return-on-investment) if the stock closes above the $485.00 strike price on the 1/16/2026 options expiration date. Although this would be a small return-on-investment result, it shows that selling in-the-money strike prices can still be profitable even when there is a substantial decline in the stock price -- for example, from $522.64 to $485.00 (-7.2% decline) in this Microsoft position. The potential return-on-investment results are detailed below as follows:
Microsoft Corporation (MSFT) -- Continuation of Covered Call PositionThe net debit buy/write limit order was executed as follows:
10/30/2025 Bought 100 shares of Microsoft stock @ $522.64 per share.
10/30/2025 Sold 1 MSFT November 7th, 2025 $512.50 Call option @ $14.08 per share. The Implied Volatility of the Call was 25.3 when this transaction was executed.
11/7/2025 One hundred Microsoft shares closed below the $512.50 strike price at $496.77, so the one Call option expired and the 100 Microsoft shares remained in the Covered Calls Advisor Portfolio.
11/10/2025 Continued this Microsoft Corporation Covered Call position by selling 1 November 14th, 2025 $505.00 Call option at $4.00 per share when the stock was trading at $502.45 per share.
11/14/2025 One Microsoft 11/14/2025 $505.00 Call option expired out-of-the-money, so the 100 Microsoft shares remain in the Covered Calls Advisor Portfolio.
11/20/2025 Ex-dividend of $.91 per share.
11/28/2025 Continued this Microsoft Covered Call position by rolling down-and-out by selling one 12/12/2025 $492.50 Call option at $8.20 per share.
12/12/2025 One hundred Microsoft shares closed below the $492.50 strike price, so the one Call option expired and the 100 Microsoft shares remained in the Covered Calls Advisor Portfolio.
12/18/2025 Continued this Microsoft Corporation Covered Call position by selling 1 January 2nd, 2026 $487.50 Call option at $6.30 per share when the stock was trading at $484.12 per share.
1/2/2026 One hundred Microsoft shares closed below the $487.50 strike price, so the one Call option expired and the 100 Microsoft shares remained in the Covered Calls Advisor Portfolio.
1/7/2026 Continued this Microsoft Corporation Covered Call position by selling 1 January 16th, 2026 $485.00 Call option at $5.40 per share when the stock was trading at $482.40 per share.
A possible overall performance result (including commissions) if this position is assigned on its 1/16/2026 options expiration date is as follows:
Microsoft Covered Call Net Investment: $50,856.67
= ($522.64 - $14.08) * 100 shares + $.67 commission
Net Profit Components:
(a) Call Option Income: +$3,794.65
= ($14.08 + $4.00 + $8.20 + $6.30 + $5.40) * 100 shares - $3.35 commissions
(b) Dividend Income: +$91.00 = $.91 ex-dividend x 100 shares
(c) Capital Appreciation (If Microsoft stock is above the $485.00 strike price at the January 16th, 2026 option expiration date): -$3,764.00
= ($485.00 strike price - $522.64 stock purchase price) * 100 shares
Potential Total Net Profit (If assigned at expiration): +$121.65
= (+$3,794.65 Call option income + $91.00 dividend income - $3,764.00 capital appreciation)
Potential Absolute Return-on-Investment: +0.2%
= +$121.65/$50,856.67
Potential Equivalent Annualized-Return-on-Investment: +1.1%
= (+$121.65/$50,856.67) * (365/78 days)
