February 16th, 2018 Options Expiration Results

The Covered Calls Advisor Portfolio had five positions with February 16th, 2018 options expirations.  Of these, three positions (Alibaba Group Holding Ltd., Micron Technology Inc., and Valero Energy Corp.) closed in-the-money, so the maximum possible return-on-investment result was achieved for each of these positions:

• Alibaba Group Holding Ltd.:  +2.2% absolute return (+25.6% annualized return) in 31 days
• Micron Technology Inc.:  +3.15% absolute return (+31.1% annualized return) in 37 days  
• Valero Energy Corp.:  +2.4% absolute return (+54.7% annualized return) in 16 days

The cash now available in the Covered Calls Advisor Portfolio from the closing of these three positions will be retained until new Covered Calls and/or 100% Cash-Secured Puts positions are established.  Any new position(s) established with this available cash will be posted on this site on the same day the transactions occur.  

The remaining two positions (Caterpillar Inc. and Intel Corporation) closed yesterday with their stock price below their strike prices, so those shares will remain in the Covered Calls Advisor Portfolio (see holdings in right sidebar) until either the stock is sold or continuation Covered Calls positions are established.  Caterpillar's strike price was $157.50 and the stock closed at yesterday's expiration at $156.29 while Intel had a $47.50 strike price and it closed at $45.56.

To show one example of how the return-on-investment results for closed Covered Calls positions are calculated, the details for one of the three assigned positions (Alibaba) is provided here:


Alibaba Group Holding Ltd. (BABA) -- Covered Calls Position Closed

The transactions were as follows:
01/17/2017 Bought 300 shares of Alibaba stock @ $180.09 per share 
01/17/2017 Sold 3 Alibaba February 16th, 2017 $170.00 Call options @ $13.73 per share
Note: this was a simultaneous Buy/Write transaction
02/16/2018 3 BABA Feb 16th, 2018 $170.00 Call options expired in-the-money, so 300 shares of BABA owned were sold at the $170.00 strike price, thus closing out this Covered Calls position.

The overall performance result (including commissions) was as follows:
Covered Calls Cost Basis: $49,914.96
= ($180.09 - $13.73)* 300 shares + $6.96 commission

Net Profit Components:
(a) Options Income: +$4,119.00
= ($13.73* 300 shares)
(b) Dividend Income: +$0.00 
(c) Capital Appreciation (BABA stock closed above $170.00 strike price on Feb 16th expiration): -$3,031.95
= ($170.00 -$180.09)* 300 shares - $4.95 commission

Total Net Profit: +$1,087.05
= (+$4,119.00 options income +$0.00 dividend income -$3,031.95 capital appreciation)

Absolute Return: +2.2%
= +$1,087.05/$49,914.96
Equivalent Annualized Return: +25.6%
= (+$1,087.05/$49,914.96)*(365/31 days)