November 15th, 2019 Monthly Options Expiration Results

The Covered Calls Advisor Portfolio had six positions since the October 18th, 2019 monthly options expiration date.  Five positions (ConocoPhillips, Alexion Pharmaceuticals Inc., Alibaba Group Holding (2 positions), and Citigroup Inc.) were in-the-money at expiration and were therefore closed out profitably.  One position (Diamondback Energy) closed out-of-the-money (stock price below the strike price) at the November 15th, 2019 options expiration, so these shares now remain in the Covered Calls Advisor Portfolio (as shown in the right sidebar).  A decision will be made soon to either sell the Diamondback Energy shares or continue with this Covered Calls position by selling Call options against the shares currently held.  As always, the transactions and return-on-investment results for this position will be posted on this blog site on the same day the transactions occur.

The results for the five closed Covered Calls positions were as follows:

One Covered Calls position in ConocoPhillips had a weekly options expiration on October 25th, 2019, which was after the October 18th monthly expiration but prior to this month's November 15th expiration.  The stock was in-the-money at expiration, so the shares were sold (assigned) and the annualized return-on-investment from this position was +32.5%.  The details of this position were posted on this blog site when the position was closed -- see link.

Four Covered Calls positions closed in-the-money on the November 15th monthly options expiration date.  The detailed transactions and results for each of these positions is provided below.

So far in calendar year 2019, 50 positions have been closed out at a profit, only one was closed out at a loss, and three (CommScope Holdings, Diamondback Energy, and Marathon Petroleum Corp.) remain as ongoing open positions.  The weighted average annualized return on investment for these 51 completed positions is +41.9%, which compares very favorably to the +28.0% year-to-date annualized roi for the S&P 500. 


The detailed transactions and return-on-investment results for the four Covered Calls positions closed out on the November 15th, 2019 monthly options expiration date are as follows:

1.  Alexion Pharmaceuticals Inc. (ALXN) -- Covered Calls Position Closed

The transactions were as follows:
10/22/2019 Bought 200 shares of Alexion stock @ $100.94 per share 
10/22/2019 Sold 2 Alexion November 1st, 2019 $100.00 Call options @ $4.32 per share
Note: this was a simultaneous Buy/Write transaction.
11/01/2019 Roll Out-and-Up:
Bought-to-Close 2 Alexion Nov 1, 2019 $100.50 Call options @ $7.85 per share
Sold-to-Open 2 ALXN Nov 15, 2019 $105.00 Call options @ $4.70 per share
Note: the price of Alexion stock was $107.80 when this Call spread transaction occurred today
11/15/2019 Two ALXN Call options closed in-the-money so the 200 shares were assigned (i.e. sold) at the $105.00 strike price.
Note: the price of Alexion stock was $108.37 at options expiration.
The overall performance result (including commissions) was as follows:
Covered Calls Cost Basis: $19,325.34
= ($100.94 - $4.32) * 200 shares + $1.34 commission

Net Profit Components:
(a) Options Income: +$231.32
= ($4.32 -$7.85 +$4.70) * 200 shares - $2.68 commission
(b) Dividend Income: +$0.00 
(c) Capital Appreciation (Alexion stock was above $105.00 strike price at November 15th expiration): +$812.00
= ($105.00 -$100.94) * 200 shares

Total Net Profit: +$1,043.32
= (+$231.32 options income +$0.00 dividend income +$812.00 capital appreciation)

Absolute Return: +5.4%
= +$1,043.32/$19,325.34
Equivalent Annualized Return: +78.8%
= (+$1,043.32/$19,325.34)*(365/25 days)


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

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.
11/15/2019 Two BABA Call options closed in-the-money so the 200 shares were assigned (i.e. sold) at the $172.50 strike price.
Note: the price of Alibaba stock was $185.49 at options expiration.

The overall performance result (including commissions) was 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 (BABA stock was 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)


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

The transactions were as follows:
11/01/2019 Bought 200 shares of Alibaba stock @ $176.60 per share 
11/01/2019 Sold 2 Alibaba November 15th, 2019 $182.50 Call options @ $3.25 per share
Note: The price of Alibaba stock was $180.75 when these Calls were sold and the Implied Volatility of the Call options was 27.1.
11/15/2019 Two BABA Call options closed in-the-money so the 200 shares were assigned (i.e. sold) at the $182.50 strike price.
Note: the price of Alibaba stock was $185.49 at options expiration.

The overall performance results (including commissions) was as follows:
Covered Calls Cost Basis: $34,676.29
= ($176.60 - $3.25) * 200 shares + $6.29 commission

Net Profit Components:
(a) Options Income: +$650.00
= ($3.25 * 200 shares)
(b) Dividend Income: +$0.00 
(c) Capital Appreciation (BABA stock was above $182.50 strike price at November 15th expiration): +$1,180.00
= ($182.50 -$176.60) * 200 shares

Total Net Profit: +$1,830.00
= (+$650.00 options income +$0.00 dividend income +$1,180.00 capital appreciation)

Absolute Return (BABA stock was above $182.50 strike price at November 15th expiration): +5.3%= +$1,830.00/$34,676.29
Equivalent Annualized Return: +128.4%
= (+$1,830.00/$34,676.29)*(365/15 days)


4.  Citigroup Inc. (C) -- Covered Calls Position Closed
The transactions were:
10/30/2019 Bought 300 Citigroup shares @ $72.54
10/30/2019 Sold 3 Citigroup 11/15/2019 $70.00 Call options @ $2.76
Note: A simultaneous buy/write transaction was executed.   The Open Interest in these Calls was very large at 10,098 contracts (so there is a nice, tight bid/ask spread) and given that their is no intervening quarterly earnings prior to the Nov. 15th options expiration, the Implied Volatility was also at an attractive level (25.3) for Citigroup when this position was established.
11/01/2019 $153.00 ex-dividend (300 shares x $.51 per share)
11/15/2019 Three Citigroup Inc. Call options closed in-the-money so the 200 shares were assigned (i.e. sold) at the $70.00 strike price.
Note: the price of Citi stock was $74.40 at options expiration.

The overall performance results (including commissions) for this
Citigroup Covered Calls position were as follows:
Covered Calls Cost Basis: $20,936.01
= ($72.54 - $2.76) *300 + $2.01 commission

Net Profit Components:
(a) Options Income: +$828.00
= ($2.76*300 shares)
(b) Dividend Income: +$153.00
= ($.51 dividend per share x 300 shares)

(c) Capital Appreciation (Citi shares assigned at $70.00 strike price at options expiration): -$762.00
+($70.00-$72.54)*300 shares

Total Net Profit: +$219.00

= (+$828.00 +$153.00 -$762.00)

Absolute Return (Citigroup shares assigned at $70.00 at Nov 15, 2019 expiration): +1.0%

= +$219.00/$20,936.01

Equivalent Annualized Return: +22.5%

= (+$219.00/$20,936.01)*(365/17 days)