Some potential overall return-on-investment results for each position are:
- Caterpillar Inc. -- A +4.4% absolute return in 47 days (equivalent to a +34.4% annualized return if Caterpillar stock closes above the $155.00 strike price on the March 16th, 2018 expiration date.
- Intel Corp. -- A +1.0% absolute return in 46 days (equivalent to a +7.6% annualized return if Intel stock is above the $46.00 strike price on the March 16th expiration date.
1. Caterpillar Inc. (CAT) -- Covered Call Position Continued
The transactions are as follows:
01/29/2018 Bought 100 shares of Caterpillar stock @ $160.12 per share
01/29/2018 Sold 1 Caterpillar February 16th, 2018 $157.50 Call option @ $5.99 per share
Note: this was a simultaneous Buy/Write transaction
02/16/2018 1 CAT March 16th Call option expired and 100 shares of CAT stock were retained in the Covered Calls Advisor Portfolio
Note: the price of CAT stock was $156.29 upon the options expiration.
02/20/2018 Continuation of CAT Covered Call position by selling 1 Mar 16th, 2018 Call option at the $155.00 strike @ $6.00 per share
Note: CAT stock was at $157.68 when this transaction occurred
A possible overall performance result (including commissions) would be as follows:
Covered Call Cost Basis: $15,418.62
= ($160.12 - $5.99)* 100 shares + $5.62 commission
Net Profit Components:
(a) Options Income: +$1,199.00
= ($5.99 + $6.00) * 100 shares
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If CAT stock is above $155.00 strike price at Mar16th expiration): -$516.95
= ($155.00 -$160.12)* 100 shares - $4.95 commission
Total Net Profit: +$682.05
= (+$1,199.00 options income +$0.00 dividend income -$516.95 capital appreciation)
Absolute Return: +4.4%
= +$682.05/$15,418.62
Equivalent Annualized Return: +34.4%
= (+$682.05/$15,418.62)*(365/47 days)
2. Intel Corporation (INTC) -- Covered Calls Position Continued
An ex-dividend occurred on February 6th for $.30 per share.
The transactions have been as follows:
01/30/2018 Bought 400 Intel shares @ $49.23
01/30/2018 Sold 4 Intel 02/16/2018 $47.50 Call options @ $2.04
Note: a simultaneous buy/write transaction was executed.
02/06/2018 Upcoming quarterly ex-dividend of $.30 per share
02/16/2018 4 Intel Feb. 16th Call options expired and 400 shares of Intel stock were retained in the Covered Calls Advisor Portfolio
Note: the price of Intel stock was $45.56 upon the options expiration.
02/20/2018 Continuation of Intel Covered Calls position by selling 4 Mar 16th, 2018 Call options at the $46.00 strike price @ $1.38 per share
Note: Intel stock was at $46.14 when this transaction occurred
A possible overall performance result (including commissions) for this Intel Covered Calls position is as follows:
Covered Calls Cost Basis: $18,880.95
= ($49.23 - $2.04) *400 + $4.95 commission
Net Profit Components:
(a) Options Income: +$1,357.69
= ($2.04 + $1.38) *400 shares - $10.31 commissions
(b) Dividend Income: +$120.00
= ($.30 dividend per share x 400 shares)
(c) Capital Appreciation (If INTC assigned at $46.00 strike price at Mar2018 options expiration): -$1,296.95
+($46.00 -$49.23)*400 shares - $4.95 commissions
+($46.00 -$49.23)*400 shares - $4.95 commissions
= (+$1,357.69 +$120.00 -$1,296.95)
Absolute Return (If Intel assigned at $46.00 at Mar 16th, 2018 expiration): +1.0%
Absolute Return (If Intel assigned at $46.00 at Mar 16th, 2018 expiration): +1.0%
= +$180.74/$18,880.95
Annualized Return: +7.6%
= (+$180.74/$18,880.95)*(365/46 days)