February 21st, 2020 Options Expiration Results

The Covered Calls Advisor Portfolio had two Covered Calls positions with February 21st, 2020 options expirations (Alexion Pharmaceuticals Inc. and Diamondback Energy Inc).  Both positions were in-the-money at expiration so the Call options expired and the stocks were assigned (i.e. sold) at the strike price.  So, the maximum potential return-on-investment result was achieved for both Covered Calls positions which was:

• Alexion Pharmaceuticals Inc. (ALXN) -- +1.6% absolute return (equivalent to +26.6% annualized return on investment) for the 22 days of this investment; and
• Diamondback Energy Inc. (FANG) -- +2.4% absolute return (equivalent to +73.0% annualized) for the 12 days of this investment.  

There are now two remaining open Covered Calls positions in the Covered Calls Advisor Portfolio (Alaska Air Group Inc. and Diamondback Energy Inc.), both for the March 20th, 2020 monthly options expiration date.  These existing positions are shown in the right sidebar on this page.  The cash now available in the Covered Calls Advisor Portfolio will be retained until new Covered Calls and/or 100% Cash-Secured Puts positions are established.  All future transactions will continue to be posted on this site the same day they occur.  As always, please email me at the address shown in the right sidebar with any questions or comments related to this Covered Calls Advisor blog.

The detailed transactions and results for the two closed positions were as follows:

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

The transactions were as follows:
1/31/2020 Bought 200 shares of Alexion stock @ $99.63 per share 
1/31/2020 Sold 2 Alexion February 21, 2020 $95.00 Call options @ $6.13 per share
Note: this was a simultaneous Buy/Write transaction.
2/21/2020 Two ALXN Call options closed in-the-money so the 200 shares were assigned (i.e. sold) at the $95.00 strike price.
Note: the price of Alexion stock was $103.14 at options expiration.

The overall performance result (including commissions) was as follows:
Covered Calls Cost Basis: $18,701.34
= ($99.63 - $6.13) * 200 shares + $1.34 commission

Net Profit Components:
(a) Options Income: +$1,226.00
= ($6.13 * 200 shares)
(b) Dividend Income: +$0.00 
(c) Capital Appreciation (Alexion stock was above $95.00 strike price at Feb 21st expiration): -$926.00
= ($95.00 -$99.63) * 200 shares

Total Net Profit: +$300.00
= (+$1,226.00 options income +$0.00 dividend income -$926.00 capital appreciation)

Absolute Return: +1.6%
= +$300.00/$18,701.34
Equivalent Annualized Return: +26.6%
= (+$300.00/$18,701.34)*(365/22 days)


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

The transactions were as follows:
02/10/2020 Bought 200 shares of Diamondback stock @ $72.18 per share 
02/10/2020 Sold 2 Diamondback February 21st, 2020 $70.00 Call options @ $3.82 per share
Note: this was a simultaneous Buy/Write transaction.  The Implied Volatility of the Call options was 47.4. 
2/21/2020 Two FANG Call options closed in-the-money so the 200 shares of stock were assigned (i.e. sold) at the $70.00 strike price.
Note: the price of Diamondback stock was $76.40 at options expiration.

The overall performance result (including commissions) was as follows:
Covered Calls Cost Basis: $13,673.34
= ($72.18 - $3.82) * 200 shares + $1.34 commission

Net Profit Components:
(a) Options Income: +$764.00
= ($3.82 * 200 shares)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (FANG stock was above $70.00 strike price at the Feb 21st expiration): -$436.00
= ($70.00 -$72.18) * 200 shares

Total Net Profit: +$328.00
= (+$764.00 options income +$0.00 dividend income -$436.00 capital appreciation)

Absolute Return: +2.4%
= +$328.00/$13,673.34
Equivalent Annualized Return: +73.0%
= (+$328.00/$13,673.34)*(365/12 days)