Established Covered Calls Position in KraneShares CSI China Internet ETF

A short-term in-the-money Covered Calls position was established today in KraneShares CSI China Internet ETF (ticker KWEB).  Five hundred shares were purchased at $35.21 and five February 13th, 2026 Call options were sold at the $34.50 strike price at $1.14 per share--a buy/write net debit limit transaction of $34.07 per share which provides a maximum $.43 per share [$1.14 Call options premium - ($35.21 stock purchase price - $34.50 strike price)] time value profit potential.  The probability of the Calls being in-the-money on the options expiration date was 63.4% when this transaction occurred. 

As detailed below, a potential result is +1.2% absolute return-on-investment (equivalent to +41.2% annualized return-on-investment for the next 11 days) if KWEB's share price is in-the-money (i.e. above the $34.50 strike price) and therefore assigned on its February 13th, 2026 options expiration date.

 
KraneShares CSI China Internet ETF (KWEB) -- New Covered Calls Position 

The net debit limit Buy/Write transaction was as follows:
2/2/2026 Bought 500 shares of KraneShares CSI China Internet ETF @ $35.21 per share.  
2/2/2026 Sold 5 KWEB Feb. 13th, 2026 $34.50 Call options @ $1.14 per share.  The Implied Volatility of the Calls was 30.5 when this position was established.  

A possible overall performance result (including commissions) for this CSI China Internet ETF Covered Calls position is as follows: 

KWEB Covered Calls Net Investment: $17,038.35

= ($35.21 - $1.14) * 500 shares + $3.35 commission

Net Profit:
(a) Options Income: +$566.65
= ($1.14 * 500 shares) - $3.35 commission
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If 500 CSI China Internet ETF shares assigned at $34.50 strike price at expiration): -$355.00
+($34.50 strike price - $35.21 shares purchase price) * 500 shares

Total Net Profit Potential (If 500 CSI China Internet ETF shares are assigned because they are in-the-money at the options expiration date): +$211.65
= (+$566.65 options income + $0.00 dividend income - $355.00 capital appreciation)

Potential Absolute Return-on-Investment: +1.2%
= +$211.65/$17,038.35
Potential Annualized Return-on-Investment: +41.2%
= (+$211.65/$17,038.35) * (365/11 days)

Covered Call Position Closed in Palo Alto Networks Inc.

At last Friday's weekly options expiration, three Covered Calls positions closed in-the-money each with a net profitable outcome, and one Covered Call position in Palo Alto Networks Inc. (ticker PANW) closed out-of-the-money at $176.97 which was well below its $185.00 strike price (see here).  

Software stocks (and even Cybersecurity Software stocks like Palo Alto) are currently underperforming the overall market over concerns about how significantly AI developments might negatively affect Software companies' future growth prospects.  For this reason, and also since I prefer to avoid holding stocks on their earnings reporting date (and Palo Alto has an upcoming quarterly earnings report on February 12th), I decided to close out this position by selling the 100 PANW shares.  So early in this morning's trading session, I closed out the position at a net loss of $460.67 when I sold the 100 Palo Alto Networks' shares at $177.36.  The transactions history for this Palo Alto Networks Covered Call position and its associated return-on-investment results are detailed below.

Palo Alto Networks Inc. (PANW) -- Covered Call Position Closed Out

The original buy/write net debit limit order transaction was as follows:
1/15/2026 Bought 100 Palo Alto Networks shares at $189.28.

1/15/2026 Sold 1 Palo Alto Networks 1/30/2026 $185.00 Call option @ $7.32 per share. The Implied Volatility of this Call option was 31.5 when this position was established. 

1/30/2026 One PANW $185.00 Call option closed out-of-the-money at $176.97, so the Call option expired and 100 PANW shares remained in the Covered Calls Advisor Portfolio.

2/2/2026 Closed out this Covered Call position by selling the 100 Palo Alto Networks shares at $177.36 per share. 

The overall performance results (including commissions) for this Palo Alto Networks Covered Call position are as follows:
Covered Call Net Investment: $18,196.67
= ($189.28 - $7.32) * 100 shares + $.67 commission

Net Profit:
(a) Option Income: +$731.33
= ($7.32 * 100 shares) - $.67 commission
(b) Dividend Income: +$0.00
(c) Capital Appreciation (100 Palo Alto Networks shares sold at $177.36 per share): -$1,192.00

+($177.36 stock selling price - $189.28 stock purchase price) * 100 shares

Total Net Loss: -$460.67

= (+$731.33 option income + $0.00 dividend income - $1,192.00 capital loss)

Absolute Return-on-Investment: -3.5%

= -$460.67/$13,336.67

Annualized Return-on-Investment: -70.0%

= (-$460.67/$13,336.67) * (365/18 days)