A Covered Calls position in Citigroup Inc. (ticker C) was rolled out from today's (May 18th, 2018) options expiration at the $67.50 strike price to another $67.50 strike for next month's June 15th expiration. A Call options roll out limit order was established at a net credit of $.73, and the transaction was executed within a few minutes as follows:
Buy-to-Close 5 Citigroup May 18th, 2018 Call options @ $2.40
Sell-to-Open 5 Citi June 15, 2018 Call options @ $3.13
Net Credit Received $ .73
The Covered Calls in Sinclair Broadcast Group Inc.were rolled down from today's $30.00 strike to June 15th's $29.00 strike price at a net credit of $1.53 ($1.93-$.40).
As detailed below, potential investment results are:
- Citigroup Inc. -- A +2.7% absolute return in 53 days (which is equivalent to a +18.6% annualized return-on-investment) if Citigroup stock closes above the $67.50 strike price on the June 15th options expiration date.
- Sinclair Broadcast Group Inc. -- A +1.3% absolute return in 100 days (which is equivalent to a +4.6% annualized return-on-investment) if Sinclair stock closes above the $29.00 strike price on the June 15th options expiration date.
The transaction history and potential return on investment results are as follows:
1. Citigroup Inc. (C) --Roll Out of Covered Calls Position
04/23/2018 Bought 500 shares of Citigroup stock @ $69.73 per share
04/23/2018 Sold 5 Citigroup May 18th, 2018 $67.50 Call options @ $3.01 per share
Note: this was a simultaneous Buy/Write transaction
05/04/2018 $160.00 ex-dividend = $.32 per share x 500 shares
05/18/2018 Bought-to-Close 5 Citi May 18th $67.50 Call options
05/18/2018 Sold-to-Open 5 Citi June 15, 2018 $67.50 Call options
Note: the price of Citi stock was $69.89 when this Call spread transaction occurred today
A possible overall performance result (including commissions) would be as follows:
Covered Calls Cost Basis: $33,368.30
= ($69.73 - $3.01)* 500 shares + $8.30 commission
Net Profit Components:
(a) Options Income: +$1,861.70
= ($3.01 -$2.40 + $3.13) * 500 shares -$8.30 commissions
(b) Dividend Income: +$160.00 = $.32 per share * 500 shares
(c) Capital Appreciation (If Citi is above $67.50 strike price at June 15th expiration): -$1,119.95
= ($67.50 -$69.73)* 500 shares - $4.95 commission
Total Net Profit: +$901.75
= (+$1,861.70 options income +$160.00 dividend income -$1,119.95 capital appreciation)
Absolute Return: +2.7%
= +$901.75/$33,368.30
Equivalent Annualized Return: +18.6%
= (+$901.75/$33,368.30)*(365/53 days)
2. Sinclair Broadcast Group Inc. (SBGI) -- Roll Out of Covered Calls Position
03/07/2018 Bought 400 shares of Sinclair stock @ $33.40 per share
03/07/2018 Sold 4 Sinclair March 16th, 2018 $33.00 Call options @ $1.00 per share
Note: this was a simultaneous Buy/Write transaction
03/08/2018 Ex-dividend of $72.00 ($.18 per share x 400 shares)
03/15/2018 4 March 16th Call options expired
03/27/2018 Sold 4 Sinclair April 20th, 2018 $32.00 Call options @ $1.45 per share
04/20/2018 4 Sinclair April 20th Call options expired
05/09/2018 Sold 4 Sinclair May 18th, 2018 $30.00 Call options @ $.52 per share
05/18/2018 Bought-to-Close 4 SBGI May 18th $30.00 Call options
05/18/2018 Sold-to-Open 4 SBGI June 15, 2018 $29.00 Call options
Note: the price of Sinclair stock was $30.33 when this Call spread transaction occurred today
05/31/2018 Upcoming Ex-dividend of $72.00 ($.18 per share x 400 shares)
A possible overall performance result (including commissions) would be as follows:
Covered Calls Cost Basis: $12,967.63
= ($33.40 - $1.00)* 400 shares + $7.63 commission
Net Profit Components:
(a) Options Income: +$1,784.84
= ($1.00 + $1.45 + $.52 -$.40 + $1.93) * 400 shares - 2 * $7.58
(b) Dividend Income: +$144.00
= 2 x ($.18 per share * 400 shares)
(c) Capital Appreciation (If SBGI is above $29.00 strike price at June 15th expiration): -$1,764.95
= ($29.00 -$33.40)* 400 shares - $4.95 commission
Potential Total Net Profit (If assigned at expiration): +$163.89
= (+$1,784.84 options income +$144.00 dividend income -$1,764.95 capital appreciation)
Absolute Return: +1.3%
= +$163.89/$12,967.63
Equivalent Annualized Return: +4.6%
= (+$163.89/$12,967.63)*(365/100 days)
