Early exercise by the owners of these Call options was expected since there was no time value remaining in these options. So the owners exercised their option to buy the shares in order to capture the $.55 per share dividend that goes ex-dividend today. The per share price had increased from $37.02 when this position was originally established (on August 17th) to $39.23 at yesterday's market close.
As detailed below, the actual return-on-investment result achieved for this Kohl's position was a +1.4% absolute return (equivalent to +37.0% annualized return) for the 14 days this position was held. The Covered Calls Advisor will retain the cash received in the Covered Calls Advisor Portfolio until a new Covered Calls position is established, the transactions details of which will be posted on this blog site the same day they occur.
08/17/2017 Bought 500 Kohl's shares @ $37.02
08/17/2017 Sold 5 KSS Sept 15, 2017 $35.00 Call options @ $2.52
Note: this was a simultaneous buy/write transaction.
08/31/2017 Five Call options exercised early (day prior to ex-dividend date) and stock sold at $35.00 strike price.
The overall performance result (including commissions) for this Kohl's covered calls position was as follows:
Covered Calls Position Cost Basis: $17,258.30
= ($37.02 -$2.52)*500 + $8.30 commissions
Net Profit:
(a) Options Income: +$1,260.00
= ($2.52*500 shares)
(b) Dividend Income: +$0.00
(c) Capital Appreciation: -$1,014.95
= ($35.00-$37.02)*500 shares - $4.95 commissions
Total Net Profit: +$245.05
= (+$1,260.00 options income +$0.00 dividends -$1,014.95 capital appreciation)
Absolute Return: +1.4%
= +$245.05/$17,258.30
Annualized Return: +37.0%
= (+$245.05/$17,258.30)*(365/14 days)
