Continuation of Two Alibaba Covered Calls Positions

Today, both Covered Calls positions in Alibaba Group Holding Ltd. (ticker BABA) were continued by selling December 21st, 2018 $160.00 Call options against the current Alibaba shares owned.  The Covered Calls Advisor considers Alibaba as a core hold and is continuing the pattern of prior months by establishing monthly Covered Calls positions in Alibaba. 

The two Alibaba holdings are now as follows:

• Position #1 -- Long 200 shares BABA stock and short 2 Dec 21, 2018 $160.00 Call options

• Position #2 -- Long 200 shares BABA stock and short 2 Dec 21, 2018 $160.00 Call options

As detailed below, these two positions differ in their original cost basis as well as the options income that has been received to-date.  Alibaba shares in the first position were purchased at $160.00 and at $140.375 in the second position.

1. Alibaba Group Holding Ltd. (BABA) -- Covered Calls Position #1

The transactions have been as follows:
10/04/2018 Sold-to-Open 2 Alibaba Oct. 19th, 2018 $160.00 Put options @ $4.60 per share
Note: the price of BABA stock was $156.17 when these Put options were sold
10/19/2018 Put options expired with BABA at $142.93, so 200 shares of BABA were purchased at the $160.00 strike price
10/22/2018 Sold 2 Alibaba Nov 16th, 2018 $155.00 Call options @ $4.55 per share when the BABA shares were at $147.75
11/16/2018 2 BABA $155.00 Call options expired with 200 shares priced at $154.10
11/26/2018 Sold 2 BABA Dec 21, 2018 $160.00 Call options @ $4.50 per share
Note: the price of BABA shares was $154.60 when these 2 Call options were sold

Two possible overall performance results (including commissions) would be as follows:
Covered Calls Cost Basis: $31,086.29
= ($160.00 - $4.60)* 200 shares + $6.29 commission

Net Profit Components:
(a) Options Income: +$1,797.42
= ($4.55 + $4.50)* 200 shares - $6.29 * 2 transactions
(b) Dividend Income: +$0.00 
(c) Capital Appreciation (If BABA stock is at current $154.60 strike price at Dec 21st expiration): -$1,080.00
= ($154.60 -$160.00)* 200 shares; OR
(d) Capital Appreciation (If BABA stock is above $160.00 strike price at Dec 21st expiration): -$4.95 = ($160.00 -$160.00)* 200 shares - $4.95 commission

Total Net Profit:
(a) If BABA stock is at current $154.60 strike price at Dec 21st expiration: +$717.42
= (+$1,797.42 options income +$0.00 dividend income -$1,080.00 capital appreciation); OR
(b) If BABA stock is above $160.00 strike price at Dec 21st expiration: +$1,792.47
= (+$1,797.42 options income +$0.00 dividend income -$4.95 capital appreciation)

Two Possible Return-on-Investment Results:
(a) Absolute Return (If BABA stock is at current $154.60 strike price at Dec 21st expiration): +2.3%
= +$717.42/$31,086.29
Equivalent Annualized Return: +10.7%
= (+$717.42/$31,086.29)*(365/79 days); OR
(b) Absolute Return (If BABA stock is above $160.00 strike price at Dec 21st expiration): +5.8%
= +$1,792.47/$31,086.29
Equivalent Annualized Return: +26.6%
= (+$1,792.47/$31,086.29)*(365/79 days)


2. Alibaba Group Holding Ltd. (BABA) -- Covered Calls Position #2

The transactions were as follows:
10/10/2018 Bought 200 shares of Alibaba stock @ $140.375 per share 
10/22/2018 Sold 2 Alibaba Nov 16th, 2018 $155.00 Call options @ $4.55 per share
Note: the price of BABA shares was $147.75 when these 2 Call options were sold
11/16/2018 2 BABA $155.00 Call options expired with 200 shares priced at $154.10
11/26/2018 Sold 2 BABA Dec 21, 2018 $160.00 Call options @ $4.50 per share
Note: the price of BABA shares was $154.60 when these 2 Call options were sold
Two possible overall performance results (including commissions) would be as follows:
Covered Calls Cost Basis: $28,081.29
= $140.375 * 200 shares + $6.29 commission

Net Profit Components:
(a) Options Income: +$1,797.42
= ($4.55 + $4.50)* 200 shares - $6.29 * 2 transactions
(b) Dividend Income: +$0.00 
(c) Capital Appreciation (If BABA stock is at current $154.60 strike price at Dec 21st expiration): +$2,845.00
= ($154.60 -$140.375)* 200 shares; OR
(d) Capital Appreciation (If BABA stock is above $160.00 strike price at Dec 21st expiration): +$3,920.05
= ($160.00 -$140.375)* 200 shares - $4.95 commission

Two Possible Total Net Profit Results:
(a) Total Net Profit (If BABA stock is at current $154.60 strike price at Dec 21st expiration): +$4,642.42
= (+$1,797.42 options income +$0.00 dividend income +$2,845.00 capital appreciation)
(b) Total Net Profit (If BABA stock is above $160.00 strike price at Dec 21st expiration): +$5,717.47
= (+$1,797.42 options income +$0.00 dividend income +$3,920.05 capital appreciation)

Two Possible Return-on-Investment Results:
(a) Absolute Return (If BABA stock is at current $154.60 strike price at Dec 21st expiration): +16.5%
= +$4,642.42/$28,081.29
Equivalent Annualized Return: +82.7%
= (+$4,642.42/$28,081.29)*(365/73 days); OR
(b) Absolute Return (If BABA stock is above $160.00 strike price at Dec 21st expiration): +20.4%
= +$5,717.47/$28,081.29
Equivalent Annualized Return: +101.8%
= (+$5,717.47/$28,081.29)*(365/73 days)