April 2017 Option Expiration Results

Four of the five April 2017 positions in the Covered Calls Advisor Portfolio closed in-the-money at expiration, so the maximum possible return-on-investment result was achieved for these four positions: Carmax Inc., Energy Transfer Equity LP, Hawaiian Holdings Inc., and Transdigm Group Inc. 

For the other position (JPMorgan Chase & Co.), the price of the stock was $84.52 which was below the $85.00 strike price at Apr2017 expiration, so the Covered Calls options expired.  The 400 shares will remain in the Covered Calls Advisor Portfolio until they are either sold or a continuation covered calls position established by selling four May2017 Call options against the 400 JPM shares now owned.

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

• Carmax Inc. = +0.8% absolute return (+26.2% annualized return) in 11 days
• Energy Transfer Equity LP = +2.8% absolute return (+21.9% annualized return) in 47 days
• Hawaiian Holdings Inc. = +2.3% absolute return (+27.9% annualized return) in 30 days
• Transdigm Group Inc. = +1.7% absolute return (+33.6% annualized return) in 19 days

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.  The return-on-investment results for these four closed positions are detailed below.  


1. Carmax Inc. -- 100% Cash-Secured Put Options Position Closed at Expiration
The transactions were as follows:

This position was established when the price of Carmax Inc. was $56.80 (3.2% downside protection to the strike price) and 11 days remaining until the options expiration date.

The implied volatility of the Put options was 29.0 when this position was established; so the $.45 price received per share received when the Puts were sold is a nice premium to receive for these 3.2% out-of-the-money Put options.    

The transaction was as follows:
04/11/2017  Sold 5 KMX Apr2017 $55.00 100% cash-secured Put options @ $.45
Note: the price of KMX was $56.80 today when this transaction was executed.
04/21/2017 5 KMX Apr2017 Put options expired
Note: the price of KMX was $58.31 at Apr2017 options expiration

The Covered Calls Advisor does not use margin, so the detailed information on this position and a potential result shown below reflect the fact that this position was established using 100% cash securitization for the five Put options sold.

The overall performance result (including commissions) was as follows:
100% Cash-Secured Cost Basis: $27,500.00
= $55.00*500

Net Profit:
(a) Options Income: +$216.80
= ($.45*500 shares) - $8.20 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (KMX was above $55.00 strike price at Apr2017 expiration): +$0.00
= ($55.00-$55.00)*500 shares

Total Net Profit:  +$216.80
= (+$216.80 options income +$0.00 dividend income +$0.00 capital appreciation)

Absolute Return: +0.8%
= +$216.80/$27,500.00
Annualized Return: +26.2%
= (+$216.80/$27,500.00)*(365/11 days)

2. Energy Transfer Equity LP (ETE) -- 100% Cash-Secured Put Options Position Closed at Expiration

The transactions were as follows:
03/06/2017 Sold 10 ETE Apr2017 $18.00 100% cash-secured Put options @ $.52
Note: the price of ETE was $18.99 when these Puts were sold
04/21/2017 10 ETE Apr2017 Put options expired
Note: the price of ETE was $18.26 at Apr2017 options expiration

The overall performance result (including commissions) for this Energy Transfer position was as follows:
Stock Cost Basis: $18,000.00
= $18.00*1,000 shares

Net Profit:
(a) Options Income: +$508.55
= ($.52*1,000 shares) - $11.45 commissions
(b) Dividend Income: +$0.00

(c) Capital Appreciation (ETE stock was above $18.00 strike price at Apr2017 options expiration date): +$0.00
=+($18.00-$18.00)*1,000 shares

Total Net Profit: +$508.55

= (+$508.55 options income +$0.00 dividend income +$0.00 capital appreciation)

Absolute Return: +2.8%

= +$508.55/$18,000.00

Annualized Return: +21.9%

= (+$508.55/$18,000.00)*(365/47 days)

3.  Hawaiian Holdings Inc. (HA) -- 100% Cash-Secured Put Options Position Closed at Expiration

This position was established when the price of Hawaiian Holdings was $46.88 (4.0% downside protection to the strike price) and 30 days remaining until the options expiration date.

The implied volatility of the Put options was 30.2 when this position was established; so the $1.05 price received per share received when the Puts were sold is a nice premium to receive for these 4.0% out-of-the-money Put options.    

The transaction was as follows:
03/23/2017  Sold 5 HA Apr2017 $45.00 100% cash-secured Put options @ $1.05
Note: the price of HA was $46.88 today when this transaction was executed.
04/21/2017 5 HA Apr2017 Put options expired
Note: the price of HA was $53.25 at Apr2017 options expiration

The Covered Calls Advisor does not use margin, so the detailed information on this position and a potential result shown below reflect the fact that this position was established using 100% cash securitization for the five Put options sold.

The overall performance result (including commissions) was as follows:
100% Cash-Secured Cost Basis: $22,500.00
= $45.00*500

Net Profit:
(a) Options Income: +$516.80
= ($1.05*500 shares) - $8.20 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation: +$0.00
= ($45.00-$45.00)*500 shares

Total Net Profit: +$516.80
= (+$516.80 options income +$0.00 dividend income +$0.00 capital appreciation)

Absolute Return: +2.3%
= +$516.80/$22,500.00
Annualized Return: +27.9%
= (+$516.80/$22,500.00)*(365/30 days)


4.  Transdigm Group Inc. (TDG) -- 100% Cash-Secured Put Options Position Closed at Expiration
This position was established when the price of Transdigm Group was $218.30 (3.8% downside protection to the strike price) and 19 days remaining until the options expiration date.

The implied volatility of the Put options was 35.8 when this position was established; so the $3.70 price received per share received when the Puts were sold is a nice premium to receive for these 3.8% out-of-the-money Put options.    

The transaction was as follows:
04/03/2017  Sold 2 TDG Apr2017 $201.00 100% cash-secured Put options @ $3.70
Note: the price of TDG was $218.30 today when this transaction was executed.
04/21/2017 2 TDG Apr2017 Put options expired
Note: the price of TDG was $240.21 at Apr2017 options expiration

The Covered Calls Advisor does not use margin, so the detailed information on this position and a potential result shown below reflect the fact that this position was established using 100% cash securitization for the two Put options sold.

The overall performance result (including commissions) was as follows:
100% Cash-Secured Cost Basis: $42,000.00
= $210.00*200
Note: the price of TDG was $218.30 when these options were sold

Net Profit:
(a) Options Income: +$733.75
= ($3.70*200 shares) - $6.25 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (TDG was above $210.00 strike price at Apr2017 expiration): +$0.00
= ($210.00-$210.00)*200 shares

Total Net Profit: +$733.75
= (+$733.75 options income +$0.00 dividend income +$0.00 capital appreciation)

Absolute Return: +1.7%
= +$733.75/$42,000.00
Annualized Return: +33.6%
= (+$733.75/$42,000.00)*(365/19 days)