- Two Covered Calls positions (Alexion Pharma Inc. and Cigna Corp.) closed in-the-money on the October 18th options expiration date, so for both positions their shares were assigned (sold) at their strike prices. The details of each of these closed position are shown below.
- Two positions (Alibaba Group Holdings Ltd. and Diamondback Energy) closed out-of-the-money (stock price below the strike price) at the October 18th, 2019 options expiration. Therefore, the options expired and the shares owned now 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 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. So far in calendar year 2019, 45 positions have been closed out at a profit, one was closed out at a loss, and three remain as ongoing open positions. The weighted average annualized return on investment for the 46 completed positions is +40.1%, which compares very favorably to the +26.2% year-to-date annualized return-on-investment for the S&P 500.
1. Alexion Pharma Inc. (ALXN) -- Covered Calls Position Closed
10/01/2019 Bought 200 shares of Alexion stock @ $97.44 per share
10/01/2019 Sold 2 Alexion October 18th, 2019 $95.00 Call options @ $4.59 per share
Note: this was a simultaneous Buy/Write transaction.
10/18/2019 Two ALXN Call options expired in-the-money so 200 Alexion shares sold at $95.00 strike price.
Note: the share price closed in-the-money at $98.41
The overall performance result (including commissions) would be as follows:
Covered Calls Cost Basis: $18,576.29
= ($97.44 - $4.59) * 200 shares + $6.29 commission
Net Profit Components:
(a) Options Income: +$918.00
= ($4.59 * 200 shares)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (Alexion stock was above $95.00 strike price at October 18th expiration): -$492.95
= ($95.00 -$97.44) * 200 shares - $4.95 commission
Total Net Profit: +$425.05
= (+$918.00 options income +$0.00 dividend income -$492.95 capital appreciation)
Absolute Return: +2.3%
= +$425.05/$18,576.29
Equivalent Annualized Return: +46.4%
= (+$425.05/$18,576.29)*(365/18 days)
2. Cigna Corp. (CI) -- Covered Calls Position Closed
09/26/2019 Bought 200 shares of Cigna stock @ $149.92 per share
09/26/2019 Sold 2 Cigna Oct 18th, 2019 $145.00 Call options @ $7.68 per share
Note: this was a simultaneous Buy/Write transaction
10/18/2019 Two Cigna Call options expired in-the-money so 200 Cigna shares sold at $145.00 strike price.
Note: the share price closed well in-the-money at $166.88
The overall performance result (including commissions) was as follows:
Covered Calls Cost Basis: $28,454.29
= ($149.92 - $7.68) * 200 shares + $6.29 commission
Net Profit Components:
(a) Options Income: +$,1536.00
= ($7.678 * 200 shares)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (Cigna stock was above $145.00 strike price at Oct 18th expiration): -$988.95
= ($145.00 -$149.92) * 200 shares - $4.95 commission
Total Net Profit: +$547.05
= (+$1,536.00 options income +$0.00 dividend income -$988.95 capital appreciation)
Absolute Return: +1.9%
= +$547.05/28,454.29
Equivalent Annualized Return: +30.5%
= (+$547.05/28,454.29)*(365/23 days)
