- Five positions were closed early (i.e. prior to Feb 15th expiration date). The detailed results for each position were posted previously on the dates each position was closed:
- CVS Health Corp. (Position #1) -- Early Assignment -- See link
- Lam Research Corp. -- Closed Early -- See link
- Citigroup Inc. -- Early Assignment -- See link
- Boeing Inc. -- Early Assignment -- See link
- Blackstone Group L.P. -- Early Assignment -- See link
- On the February 15th expiration date, two positions (Alibaba Group Holding Ltd. and Alphabet Inc.) were rolled out to March 15th, 2019 Covered Call positions -- posted here.
- The remaining two positions (CVS Health Corp.-- Position #2 and Lowes Companies Inc.) closed in-the-money at the February 15th, 2019 options expiration, so those shares were assigned (sold) at their respective strike prices. The return-on-investment results for these two positions are detailed below.
Note: In addition to these monthly results for this February 15th options expiration month, year-to-date results will also be reported each month beginning with the March 2019 results that will be posted soon after the March 15th monthly option expiration date.
1. CVS Health Corp. (Position #2) -- Covered Calls Position Closed
01/15/2019 Bought 200 CVS shares @ $64.39
01/15/2019 Sold 2 CVS 02/15/2019 $62.50 Call options @ $3.01
Note: A simultaneous buy/write transaction was executed. The Open Interest in these Calls was 1,020 contracts and the Implied Volatility was 29.7.
01/24/2019 Quarterly ex-dividend of $.50 per share
02/15/2019 CVS $62.50 Call options expired in-the-money, so 200 CVS shares sold at $62.50 strike price
Note: the price of CVS shares was $69.53 at market close on Feb 15th
The overall performance result (including commissions) for this CVS Covered Calls position was as follows:
Covered Calls Cost Basis: $12,280.95
= ($64.39 - $3.01) *200 + $4.95 commission
Net Profit Components:
(a) Options Income: +$600.66
= ($3.01*200 shares) - $1.34 commissions
(b) Dividend Income (CVS shares assigned at Feb 15th, 2019 expiration): +$100.00
= ($.50 dividend per share x 200 shares)
(c) Capital Appreciation (CVS shares assigned at $62.50 strike price at options expiration): -$373.05
+($62.50-$64.39)*200 shares - $4.95 commissions
+($62.50-$64.39)*200 shares - $4.95 commissions
Total Net Profit: +$317.71
= (+$600.66 +$100.00 -$382.95)
Absolute Return: +2.6%
Absolute Return: +2.6%
= +$317.71/$12,280.95
Annualized Return: +29.5%
= (+$317.71/$12,280.95)*(365/32 days)
2. Lowes Companies Inc. (LOW) -- Covered Calls Position Closed
01/17/2019 Bought 200 Lowes shares @ $91.80
01/17/2019 Sold 2 LOW 2/15/2019 $90.00 Call options @ $3.36
Note: A simultaneous buy/write transaction was executed. The Open Interest in these Calls was 467 contracts and the Implied Volatility was 25.4 when this transaction was executed.
01/22/2019 Quarterly ex-dividend of $.48 per share
02/15/2019 LOW $90.00 Call options expired in-the-money, so 200 Lowes shares sold at $90.00 strike price
Note: the price of Lowes stock was $104.24 at market close on Feb 15th
The overall performance result (including commissions) for this Lowes Covered Calls position was as follows:
Covered Calls Cost Basis: $17,692.95
= ($91.80 - $3.36) *200 + $4.95 commission
Net Profit Components:
(a) Options Income: +$670.66
= ($3.36*200 shares) - $1.34 commissions
(b) Dividend Income (Lowes shares assigned at Feb 15th, 2018 expiration): +$96.00
= ($.48 dividend per share x 200 shares)
(c) Capital Appreciation (LOW shares assigned at $90.00 strike price at options expiration): -$364.95
+($90.00-$91.80)*200 shares - $4.95 commissions
+($90.00-$91.80)*200 shares - $4.95 commissions
= (+$670.66 +$96.00 -$364.95)
Absolute Return: +2.3%
Absolute Return: +2.3%
= +$401.71/$17,692.95
Annualized Return: +27.6%
= (+$401.71/$17,692.95)*(365/30 days)
