Continuation of Alibaba Group Covered Calls

Upon the October 18th, 2019 options expiration, the Covered Calls position in Alibaba Group Holding Ltd. (ticker symbol BABA) expired with the stock price at $169.13, just below the $170.00 strike price.  So, the October Call options expired and the 200 shares of Alibaba stock were retained in the Covered Calls Advisor Portfolio.  Today, with the price of Alibaba stock at $174.85, a sell-to-open order was executed to sell 2 November 15th, 2019 Call options at the $172.50 strike price for $7.30 per share to continue this Covered Calls position.

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. 

As detailed below, a potential return-on-investment for this Alibaba position is +7.8% absolute return in 51 days (equivalent to a +55.6% annualized return-on-investment).  

Alibaba has an upcoming quarterly earnings report on November 1st.  Since this is prior to the November 15 expiration date, the Implied Volatility was elevated at 32.4 when the two Nov 15th $172.50 Call options were sold to continue this Covered Calls position.  Given the Covered Calls Advisor's current Overall Market Meter indicator of Slightly Bearish, a slightly in-the-money Covered Calls position was established.

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

The transactions have been as follows:
09/26/2019 Bought 200 shares of Alibaba stock @ $175.09 per share 
09/26/2019 Sold 2 Alibaba October 18th, 2019 $170.00 Call options @ $8.25 per share
Note: this was a simultaneous Buy/Write transaction.  The Implied Volatility of the Call options was 30.1 when this transaction was executed.
10/18/2019 BABA stock closed at $169.13, so the two Call options expired and the 200 shares of BABA were retained in the Covered Calls Advisor portfolio
10/22/2019 Sold 2 BABA Nov 15th, 2019 $172.50 Call options against the 200 shares of BABA stock to continue the BABA Covered Calls position.
Note: the price of BABA was $174.85 today when these Call options were sold.

A possible overall performance result (including commissions) would be as follows:
Covered Calls Cost Basis: $33,374.29
= ($175.09 - $8.25) * 200 shares + $6.29 commission

Net Profit Components:
(a) Options Income: +$3,108.66
= ($8.25 + $7.30) * 200 shares - $1.34 commission
(b) Dividend Income: +$0.00 
(c) Capital Appreciation (If BABA stock is above $172.50 strike price at Nov 15th expiration): -$518.00
= ($172.50 -$175.09) * 200 shares

Total Net Profit: +$2,590.66
= (+$3,108.66 options income +$0.00 dividend income -$518.00 capital appreciation)

Absolute Return: +7.8%
= +$2,590.66/$33,374.29
Equivalent Annualized Return: +55.6%
= (+$2,590.66/$33,374.29)*(365/51 days)