As detailed below, the result was a +2.0% absolute return-on-investment (equivalent to +17.1% on an annualized basis) for the 43 days that this position was held.
Since the Covered Calls Advisor believes we are most likely near a market top (see link) and my Overall Market Meter outlook is Slightly Bearish, I am continuing to increase the cash position (held in a money market fund at about 2.3% yield) in the portfolio. I am now continuing to monitor corporate revenue, earnings, and future earnings guidance during this first quarter earnings reporting season before establishing new Covered Calls positions. See Benjamin Graham quotation under 'Investing Words of Wisdom' in the right sidebar of this blog.
The transactions were as follows:03/20/2019 Bought 100 shares of BIDU @ $168.69
03/20/2019 Sold 1 BIDU April 18, 2019 $165.00 Call option @ $7.35
Note: this was a simultaneous Buy/Write transaction.
04/18/2019 Bought-to-Close 1 Apr 18th $165.00 Call @ $6.30
04/18/2019 Sold-to-Open 1 May 17th, 2019 $165.00 Call @ $10.70
Note: the price of BIDU stock was $171.24 when this roll out transaction occurred.
05/02/2019 Unwound the Baidu Buy/Write position by simultaneous transaction to Buy-to-Close 1 BIDU May 17th, 2019 $165.00 Call option and Sell 100 BIDU shares
Note: the share price was $166.80 and the Call option was bought-to-close at $6.50 per share
The overall performance result (including commissions) would be as follows:
Covered Call Cost Basis: $16,128.38
= ($168.69 - $7.35) * 100 shares + $5.62 commission
Net Profit:
(a) Options Income: +$518.71
= ($7.35 - $6.30 + $10.70 - $6.50) * 100 shares) - $6.29 commission
(b) Dividend Income: +$0.00
(c) Capital Appreciation (Baidu shares sold at $166.80): -$193.95
= ($166.80 - $168.69) * 100 shares - $4.95 commission
Total Net Profit: +$324.76
= (+$518.71 options income +$0.00 dividend income -$193.95 capital appreciation)
Absolute Return: +2.0%
= +$324.76/$16,128.38
Equivalent Annualized Return: +17.1%
= (+$324.76/$16,128.38)*(365/43 days)
