Early Assignment of Covered Call Position in Morgan Stanley

I was notified via email early this morning by my broker (Schwab) that the one Morgan Stanley (ticker MS) November 6th, 2026 Call option was exercised early.  Morgan Stanley's stock price increased from $181.43 when this position was established to $190.00 at yesterday's market close.  The original $2.20 time value in the Call option when the position was established had declined to almost $0.00 at yesterday's market close. So, with 7 days remaining until the Nov. 6th, 2026 options expiration date, the owner of this Call exercised their option to buy the 100 shares at the $175.00 strike price in order to receive today's $1.15 per share ex-dividend and I achieved all of the original $2.20 per share time value as profit.  

Although I will not receive the ex-dividend, I am satisfied with the +42.1% annualized-return-on-investment (aroi) result achieved since it slightly exceeds the +39.2% maximum aroi that might have been achieved if this position instead had remained in-the-money and would have therefore been assigned on its upcoming November 6th options expiration date.   

The post when this Morgan Stanley Covered Call position was originally established is here.  

As detailed below, the return-on-investment result for this Morgan Stanley Covered Call position was +1.3% absolute return in 11 days (equivalent to a +42.1% annualized return-on-investment).

Morgan Stanley (MS) -- New Covered Call Position
The buy/write transaction was:
10/19/2026 Bought 100 Morgan Stanley shares @ $181.43
10/19/2026 Sold 1 Morgan Stanley 11/6/2026 $175.00 Call option @ $8.63
Note: the Implied Volatility of the Call option was 30.2 when this buy/write transaction was executed.
10/30/2026 Early Assignment of this one Morgan Stanley Call option, so the Call expired and 100 Morgan Stanley shares were sold at the $175.00 strike price.

The overall performance results (including commissions) for this Morgan Stanley Covered Call position are as follows:
Covered Call Cost Basis: $17,280.67
= ($181.43 - $8.63) * 100 shares + $.67 commission

Net Profit Components:
(a) Option Income: +$862.33
= ($8.63 * 100 shares) - $.67 commission
(b) Dividend Income (If option exercised early on October 29th, the last business day prior to the October 30th, 2026 ex-div date): +$0.00

(c) Capital Appreciation (Morgan Stanley Call option assigned early on Oct. 30th): -$643.00
+($175.00 strike price - $181.43 stock purchase price) * 100 shares

Total Net Profit: +$219.33

= (+$862.33 option income + $0.00 dividend income - $643.00 capital appreciation)

Absolute Return-on-Investment: +1.3%

= +$219.33/$17,280.67

Annualized Return-on-Investment: +42.1%

= (+$219.33/$17,280.67) * (365/11 days)

Covered Call Position Established in NVIDIA Corporation

A short-term (10 days) slightly in-the-money Covered Call position was established this afternoon in NVIDIA Corporation (ticker NVDA).  My net buy/write limit order at $212.32 was executed when one hundred shares were purchased at $217.67 and one November 6th, 2026 Call option was simultaneously sold at the $217.50 strike price at $5.35 per share, which provides a $5.18 per share = [$5.35 Call option premium received - ($217.67 stock purchase price - $217.50 option strike price)] time value profit potential.  The probability that NVIDIA's stock will close in-the-money on the 11/6/2026 options expiration date was 50.0% when this transaction was executed.  Also, the next quarterly earnings report on November 17th is after the November 6th options expiration date. 

As detailed below, a potential return-on-investment result is +2.4% absolute return-on-investment (equivalent to +88.9% annualized return-on-investment for the next 10 days) if NVIDIA's share price is in-the-money (i.e. above the $217.50 strike price) and therefore assigned on its November 6th, 2026 options expiration date.  

NVIDIA Corporation (NVDA) -- New Covered Call Position

Today's buy/write net limit order transaction was as follows:
10/27/2026 Bought 100 NVIDIA Corporation shares at $217.67.

10/27/2026 Sold 1 NVIDIA 11/6/2026 $217.50 Call option @ $5.35 per share.  The Implied Volatility of this Call option was 35.8 when this position was established.  

A possible overall performance result (including commissions) for this NVIDIA Corporation Covered Call position is as follows:
Covered Call Net Investment: $21,232.67
= ($217.67 - $5.35) * 100 shares + $.67 commission

Net Profit:
(a) Option Income: +$534.33
= ($5.35 * 100 shares) - $.67 commission
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If 100 NVIDIA shares assigned at the $217.50 strike price at expiration): -$17.00
+($217.50 strike price - $217.67 stock purchase price) * 100 shares

Total Net Profit Potential (If 100 NVIDIA shares in-the-money and therefore assigned at the $217.50 strike price at the options expiration date): +$517.33
= (+$534.33 option income + $0.00 dividend income - $17.00 capital appreciation)

Potential Absolute Return-on-Investment: +2.4%
= +$517.33/$21,232.67
Potential Annualized Return-on-Investment: +88.9%
= (+$517.33/$21,232.67) * (365/10 days)

Covered Call Positions Closed in Akamai Technologies Inc. and AppLovin Corporation

On Friday October 16th, the Covered Call position in Akamai Technologies Inc. (ticker AKAM) closed out-of-the-money at $87.81 which was well below its $105.00 strike price.  Today I decided to close out this position by selling the 100 AKAM shares.  So early in this morning's trading session, I closed out the position at a net loss of $554.67 when I sold the 100 Akamai Technologies shares at $96.00.  

Last Friday on October 23rd, the Covered Call position in AppLovin Corporation (ticker APP) closed out-of-the-money at $260.25 which was below its $262.50 strike price.  Today I closed out this position by selling the 100 AppLovin shares at a net profit of $459.33 when I sold the 100 AppLovin shares at $262.00.  

The transactions history for both Covered Call positions and their associated return-on-investment results are detailed below.

 

1. Akamai Technologies Inc. (AKAM) -- Closed Out this Covered Call Position

The simultaneous buy/write transaction was as follows:
9/28/2026 Bought 100 shares of Akamai Technologies stock @ $110.11 per share.  
9/28/2026 Sold 1 Akamai October 16th, 2026 $105.00 Call option @ $8.57 per share.

10/16/2026 One Akamai $105.00 Call option closed out-of-the-money at $87.81, so the Call expired and 100 AKAM shares remained in the Covered Calls Advisor Portfolio.

10/26/2026 Closed out this Covered Call position by selling the 100 Akamai shares at $96.00 per share. 

The overall performance result (including commissions) was as follows:
Covered Call Cost Basis: $10,154.67
= ($110.11 - $8.57) * 100 shares + $.67 commission

Net Profit Components:
(a) Option Income: +$856.33
= ($8.57 * 100 shares) - $.67
(b) Dividend Income: +$0.00 
(c) Capital Appreciation (Akamai stock sold at $96.00): -$1,411.00
= ($96.00 stock selling price - $110.11 stock purchase price) * 100 shares

Total Net Loss: -$554.67
= (+$856.33 option income + $0.00 dividend income - $1,411.00 capital appreciation)

Absolute Return-on-Investment: -5.5%
= -$554.67/$10,154.67
Equivalent Annualized Return-on-Investment: -71.2%
= (-$554.67/$10,154.67) * (365/28 days)

    

2. AppLovin Corporation (APP) -- Closed Out this Covered Call Position

The simultaneous buy/write transaction was as follows:
10/9/2026 Bought 100 shares of AppLovin stock @ $276.98 per share.  
10/9/2026 Sold 1 AppLovin October 23rd $262.50 Call option @ $19.58 per share.

10/23/2026 One AppLovin $262.50 Call option closed out-of-the-money at $260.25, so the Call expired and 100 AppLovin shares remained in the Covered Calls Advisor Portfolio.

10/26/2026 Closed out this Covered Call position by selling the 100 AppLovin shares at $262.00 per share.

The overall performance result (including commissions) was as follows:
Covered Call Cost Basis: $25,740.67
= ($276.98 - $19.58) * 100 shares + $.67 commission

Net Profit Components:
(a) Option Income: +$1,957.33
= ($19.58 * 100 shares) - $.67
(b) Dividend Income: +$0.00 
(c) Capital Appreciation (AppLovin stock sold at $262.00 per share): -$1,498.00
= ($262.00 stock selling price - $276.98 stock purchase price) * 100 shares

Total Net Profit: +$459.33
= (+$1,957.33 option income + $0.00 dividend income - $1,498.00 capital appreciation)

Absolute Return-on-Investment: +1.8%
= +$459.33/$25,740.67
Equivalent Annualized Return-on-Investment: +38.3%
= (+$459.33/$25,740.67) * (365/17 days)

October 23rd, 2026 Options Expiration Results

The Covered Calls Advisor Portfolio had two Covered Calls positions (Alphabet Inc. and AppLovin Corporation with October 23rd, 2026 options expiration dates.  Both positions closed out-of-the-money so the Call options expired and the shares remain in the Covered Calls Advisor Portfolio.  A summary for each of these positions is as follows:

1. Alphabet Inc. (GOOGL) -- This Covered Call position closed yesterday at $321.15 which was below its $340.00 strike price, so the one Call option expired and 100 Alphabet Inc. shares now remain in the Covered Calls Advisor Portfolio.  The original blog post detailing this position is here.  Early in this upcoming week I will decide to either continue this Covered Call position by selling one Call option against the 100 Alphabet shares currently held or close out the position by selling these shares. 

2. AppLovin Corporation (APP) -- This Covered Call position closed yesterday at $260.60 which was below its $262.50 strike price, so the one Call option expired and 100 AppLovin shares now remain in the Covered Calls Advisor Portfolio.  The original blog post detailing this position is here.  Early in this upcoming week I will decide to either continue this Covered Call position by selling one Call option against the 100 AppLovin shares currently held or close out the position by selling these shares. 

As always, I welcome your feedback or questions at my email address shown below on anything related to the Covered Calls investing strategy.

Jeff Partlow
The Covered Calls Advisor
partlow@cox.net