February 2017 Option Expiration Results

The Covered Calls Advisor Portfolio (CCAP) for the February 2017 options expiration benefited from the ongoing bull market and good results from those companies in the portfolio that released earnings reports during the past month. 

Twelve of the thirteen Feb2017 positions closed in-the-money at expiration, so the maximum possible return-on-investment result was achieved for each of these twelve positions: Alibaba Group Holdings, Amazon.com Inc., Capital One Financial, Celgene Corporation, Citigroup Inc., Energy Transfer Equity LP, Facebook Inc., Hanes Brands Inc., Hawaiian Holdings Inc., HCA Holdings Inc., JetBlue Airways Corp., and Metlife Inc.

For the other position (Las Vegas Sands Corp.), the price of the stock closed at $52.03 (below the $52.50 strike price). So the short Put options were assigned and 500 shares were purchased at $52.50. The shares will remain in the Covered Calls Advisor Portfolio until they are either sold or a continuation covered calls position is established by selling Mar2017 call options against the shares owned.

I.  For the twelve closed positions:
The return-on-investment results for each position was:

• Alibaba Group Holdings = +2.6% absolute return (+26.7% annualized return)
• Amazon.com Inc. = +2.3% absolute return (+22.9% annualized return)
• Capital One Financial = +0.8% absolute return (+24.9% annualized return)
• Celgene Corporation = +2.1% absolute return (+30.1% annualized return)
• Citigroup Inc. = +5.8% absolute return (+68.5% annualized return)
• Energy Transfer Equity LP = +3.7% absolute return (+70.3% annualized return)
• Facebook Inc. = +1.6% absolute return (+30.1% annualized return)
• Hanes Brands Inc. = +3.1% absolute return (+29.8% annualized return)
• Hawaiian Holdings Inc. = +1.4% absolute return (+15.4% annualized return)
• HCA Holdings Inc. = +2.0% absolute return (+39.1% annualized return)
• JetBlue Airways Corp. = +1.9% absolute return (+33.9% annualized return)
• Metlife Inc. = +1.3% absolute return (+25.0% annualized return)

The cash now available in the Covered Calls Advisor Portfolio from the closing of these positions will be retained until new Covered Calls and/or 100% Cash-Secured Puts positions are established.  Any new positions established with this available cash will be posted on this site on the same day the transactions occur.  As examples of how return-on-investment results are calculated, one short 100% Cash-Secured Put options position (Alibaba) and one Covered Calls position (Capital One Financial) are presented in detail below.  


1. Alibaba Group Holdings -- 100% Cash-Secured Put Options Position Closed at Expiration
The transactions were as follows:
01/12/2017 Sold 4 Feb2017 $92.50 Puts @ $2.46
Note: The price of Alibaba was $95.13 when this transaction was executed.
02/17/2017 4 short BABA options expired
Note: the price of BABA was $100.52 upon options expiration 

The overall performance result (including commissions) for these short Alibaba Put options was:
Investment (100% Cash-Secured Basis): $37,000.00
= $92.50*400 shares

Net Profit:
(a) Options Income: +$974.25
= 400*$2.46 - $9.75 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation = +$0.00 (short Put options expired)

Total Net Profit: +$974.25
= (+$974.25 options income +$0.00 dividend income +$0.00 capital appreciation)

Absolute Return: +2.6%
= +$974.25/$37,000.00
Annualized Return: +26.7%
= (+$974.25/$37,000.00)*(365/36 days)

2. Capital One Financial -- Covered Calls Position Closed at Expiration
The transactions were as follows:
02/06/2017  Bought 300 Capital One Financial shares @ $87.78
02/06/2017 Sold 3 COF Feb2017 $85.50 Call options @ $2.63
Note: this was a simultaneous buy/write transaction.
02/09/2017 Ex-dividend of $120.00 ($.40 per share x 300 shares)
02/17/2017 3 COF Call options were in-the-money at the Feb2017 options expiration, so 300 shares of COF were sold at the $85.50 strike price
Note: the closing price of COF was $91.81 upon the options expiration

The overall performance result (including commissions) was as follows:
Bought 300 shares COF: $26,340.95
= $87.78*300 + $6.95 commission

Net Profit:
(a) Options Income: +$786.90
= ($2.63*300 shares) - $2.10 commissions
(b) Dividend Income: +$120.00
= $.40 per share * 300 shares
(c) Capital Appreciation (COF was above $85.50 strike price at Feb2017 expiration): -$690.95
= ($85.50-$87.78)*300 shares - $6.95 commissions

Total Net Profit (COF was above $85.50 strike price at Feb2017 options expiration): +$215.95
= (+$786.90 options income +$120.00 dividends -$690.95 capital appreciation)

Absolute Return: +0.8%
= +$215.95/$26,340.95
Annualized Return: +24.9%
= (+$215.95/$26,340.95)*(365/12 days)


II. For the one continuing position:
The position that ended at Feb2017 options expiration with the price of the stock below the strike price was Las Vegas Sands Corp (500 shares of  LVS stock).

This position in Las Vegas Sands is included in the listing of the current Covered Calls Advisor Portfolio shown in the right sidebar on this page. For this position, the long shares will remain in the Portfolio until they are either sold or new Covered Calls are established by selling associated Mar2017 options against the stock currently held.   In either case, transactions and overall position results will be posted on this site on the same day they occur.