December 20th, 2019 Monthly Options Expiration Results

The Covered Calls Advisor Portfolio had three positions with December 20th, 2019 monthly options expiration date and the results at options expiration were:

• One position in Diamondback Energy closed in-the-money on the December 20th options expiration date, so the 200 shares were assigned (sold) at the $85.00 strike price.  The detailed transactions and results are shown below.
• Two positions (CommScope Holdings and Marathon Petroleum Corp.) closed out-of-the-money (stock price below the strike price) at the December 20th, 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, 51 positions have been closed out at a profit, one was closed out at a loss, and two remain as ongoing open positions.  The weighted average annualized return on investment for the 51 completed positions is +41.5%, which substantially exceeds the +28.5% year-to-date annualized return-on-investment for the S&P 500. 
Note:  the final 2019 results will be posted in early January -- soon after the December 31st end of this calendar year. 




1. Diamondback Energy (FANG) -- Covered Calls Position Closed

The transactions have been as follows:
09/30/2019 Bought 200 shares of Diamondback stock @ $89.61 per share 
09/30/2019 Sold 2 Diamondback October 18th, 2019 $85.00 Call options @ $6.13 per share
Note: this was a simultaneous Buy/Write transaction.  The Implied Volatility of the Call options was 39.5. 
10/18/2019 FANG stock closed at $81.97, so the two Call options expired and the 200 shares of Diamondback Energy were retained in the Covered Calls Advisor portfolio.
10/22/2019 Sold 2 FANG Nov 15th, 2019 $85.00 Call options at $2.99 against the 200 shares of Diamondback stock to continue the FANG Covered Calls position.
Note: the price of FANG was $84.13 today when these Call options were sold.
11/14/2019 Ex-dividend of $37.50 = $.1875 per share x 200 shares
11/15/2019 FANG stock closed at $77.09, so the two Call options expired and the 200 shares of Diamondback Energy were retained in the Covered Calls Advisor portfolio.
12/06/2019 Sold 2 FANG Dec. 20th, 2019 $85.00 Call options at $1.45 against the 200 shares of Diamondback stock to continue the FANG Covered Calls position.
12/20/2019 At this options expiration date, the FANG stock price closed above the $85.00 strike price, so the 200 shares were assigned (i.e. sold) at $85.00 per share.


The overall performance results (including commissions) were as follows:
Covered Calls Cost Basis: $16,666.29
= ($89.61 - $6.31) * 200 shares + $6.29 commission

Net Profit Components:
(a) Options Income: +$1,945.98
= ($6.31 + $2.99 +$1.45) * 200 shares - $2.68 commission
(b) Dividend Income: +$37.50
= $.1875 per share x 200 shares 
(c) Capital Appreciation: -$922.00
= ($85.00 -$89.61) * 200 shares

Total Net Profit: +$1,061.48
= (+$1,945.98 options income +$37.50 dividend income -$922.00 capital appreciation)

Absolute Return: +6.4%= +$1,061.48/$16,666.29
Equivalent Annualized Return: +28.3%
= (+$1,061.48/$16,666.29)*(365/82 days)