Upon the August 18th, 2017 options expiration, the Covered
Calls position in Devon Energy Corp. (ticker symbol DVN) expired with
the stock price below the $35.00 strike price. So, the August Call
options expired and the 500 shares of Devon stock were retained in the
Covered Calls Advisor Portfolio. Today, when Devon stock had risen to $34.12,
a sell-to-open order was executed to sell 5 October 20th, 2017 Call
options at the $35.00 strike price for $.89 per share to continue the
Devon Covered Calls position.
The history of this Devon Energy position so far as well as a potential return-on-investment result is detailed below:
Devon Energy Corp. (DVN) -- Continuation Covered Calls Position
The transactions were as follows:
05/25/2017 Bought 500 Devon Energy Corp. shares @ $37.45
05/25/2017 Sold 5 DVN June 16, 2017 $36.00 Call options @ $2.10
Note: this was a simultaneous buy/write transaction.
06/13/2017 Ex-dividend of $30.00 ($.06 x 500 shares)
06/16/2017 5 DVN June 16th, 2017 Call options expired
Note: the price of DVN stock closed at $31.76 upon the June 16th options expiration date.
07/03/2017 Sold 5 DVN July 21, 2017 $33.00 Call options @ $.87 per share
07/21/2017 5 DVN Call options expired
07/26/2017 Sold 5 DVN Aug 18, 2017 $35.00 Call options @ $.65 per share
08/18/2017 5 DVN Call options expired
Note: the price of DVN stock was $30.40 upon expiration of the Aug 18th Call options
09/14/2017 Ex-dividend of $30.00 ($.06 x 500 shares)
09/14/2017 Sold 5 DVN October 20th, 2017 $35.00 Call options @ $.89 per share
Note: the price of DVN stock was $34.12 today when the Oct 20th Call options were sold
A possible overall performance result (including commissions) would be as follows:
Cost Basis of Purchase of 500 shares DVN: $17,679.95
= ($37.45 - $2.10)*500 + $4.95 commission
Net Profit:
(a) Options Income: +$2,241.60
= ($2.10 + $.87 + $.65 + $.89) *500 shares - 4*$3.35 commissions
(b) Dividend Income: +$60.00
= ($.06 + $.06) * 500 shares
(c) Capital Appreciation (If DVN is above $35.00 strike price at Oct 20th, 2017 expiration): -$1,229.95
= ($35.00-$37.45)*500 shares - $4.95 commissions
Total Net Profit (If DVN stock is above $35.00 strike price at Oct 20, 2017 options expiration): +$1,017.65
= (+$2,241.60 options income +$60.00 dividends -$1,229.95 capital appreciation)
Absolute Return: +5.8%
= +$1,017.65/$17,679.95
Annualized Return: +14.2%
= (+$1,017.65/$17,679.95)*(365/148 days)