August 16th, 2019 Monthly Options Expiration Results

The Covered Calls Advisor Portfolio had seven positions since the July 19th, 2019 monthly options expiration date.  All three positions that have been closed out were profitable:

• One Covered Calls position in Bristol-Myers Squibb Co. was closed out early on July 22nd to avoid the uncertainty associated with the earnings report that was released later that week.  A  small profit was achieved in this position -- see link. 

• One Covered Calls position in Morgan Stanley was assigned early (on the day prior to the July 30th ex-dividend date) and was closed out at a profit prior to this month's August 16th options expiration date.  The detailed result for this position was detailed on this blog on the same day it was closed out -- see link.

• One Covered Calls position (Alibaba Group Holdings Ltd.) closed in-the-money on the August 16th options expiration date yesterday, so these 300 shares were assigned (sold) at the $165.00 strike price.  The details of this closed position are provided below.

Four positions (CommScope Holdings, Lowes Companies Inc., Valero Energy Corp., and Wells Fargo Bank N.A.) closed out-of-the-money (stock price below the strike price) at the August 16th, 2019 options expiration.  Therefore, their options expired and the shares owned remain in the Covered Calls Advisor Portfolio (as shown in the right sidebar).  A decision will be made soon to either sell the shares or to continue with Covered Calls positions by selling Call options against the shares currently held.  As always, the transactions and return-on-investment results for these four positions will be posted on this blog site on the same day the transactions occur.

The Covered Calls Advisor's objective is to outperform the S&P 500 benchmark and to make profitable trades on at least two-thirds of positions established.  So far in calendar year 2019, all 39 positions that have been closed out have achieved a profit.  The weighted average annualized return on investment for these completed positions is +41.9%.  The four remaining open positions will be included in this 2019 results tracking when these ongoing positions are closed.


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

The transactions were as follows:
07/30/2019 Bought 300 shares of Alibaba stock @ $173.34 per share 
07/30/2019 Sold 3 Alibaba August 16th, 2019 $165.00 Call options @ $10.20 per share
Note: this was a simultaneous Buy/Write transaction
08/16/2019 3 Call options expired in-the-money so 300 Alibaba shares sold at $165.00 strike price.
Note: the share price closed at $174.60

The overall performance result (including commissions) was as follows:
Covered Calls Cost Basis: $48,948.96
= ($173.34 - $10.20) * 300 shares + $6.96 commission

Net Profit Components:
(a) Options Income: +$3,060.00
= ($10.20* 300 shares)
(b) Dividend Income: +$0.00 
(c) Capital Appreciation (BABA stock was above $165.00 strike price at August 16th expiration): -$2,506.95
= ($165.00 -$173.34) * 300 shares - $4.95 commission

Total Net Profit: +$553.05
= (+$3,060.00 options income +$0.00 dividend income -$2,506.95 capital appreciation)

Absolute Return: +1.1%
= +$553.05/$48,948.96
Equivalent Annualized Return: +22.9%
= (+$553.05/$48,948.96)*(365/18 days)