The Covered Calls Advisor Portfolio had ten positions with April 17th, 2020 options expirations. Since the March 20th options expiration, the S&P 500 has risen dramatically from 2,305 to its current level of 2,875. Consequently, all ten positions were in-the-money at expiration, the options expired, and the stocks were assigned (i.e. sold) at their respective strike prices. The maximum potential return-on-investment results were achieved for all ten positions as follows:
- Alibaba Group Holdings (BABA) -- +4.0% absolute return (equivalent to +44.5% annualized return on investment) for the 33 days of this investment
- Alphabet Inc. (GOOGL) -- +3.5% absolute return (equivalent to +74.6% annualized) for the 17 days of this investment
- Baidu Inc. (BIDU) -- +2.2% absolute return (equivalent to +79.1% annualized) for the 10 days of this investment
- Facebook Inc. (FB) -- +5.7% absolute return (equivalent to +62.9% annualized) for the 33 days of this investment
- iShares MSCI Emerging Markets ETF (EEM) -- +3.6% absolute return (equivalent to +55.1% annualized) for the 24 days of this investment
- JPMorgan Chase & Co. (JPM) -- +11.4% absolute return (equivalent to +125.8% annualized) for the 33 days of this investment
- Merck & Co. Inc. (MRK) -- +7.6% absolute return (equivalent to +64.6% annualized) for the 43 days of this investment
- Oracle Corp. (ORCL) -- +2.6% absolute return (equivalent to +52.4% annualized) for the 18 days of this investment
- SPDR S&P 500 ETF (SPY) -- +3.4% absolute return (equivalent to +49.6% annualized) for the 25 days of this investment
- SPDR S&P 500 ETF (SPY) -- +3.8% absolute return (equivalent to +59.8% annualized) for the 23 days of this investment
There is now only one current Covered Calls position in the Covered Calls
Advisor Portfolio (Morgan Stanley) with a May 15th, 2020 monthly options expiration date. The cash now available will be retained until new Covered Calls and/or 100%
Cash-Secured Puts positions are established. The Covered Calls Advisor intends to invest this cash on new positions but will do so slowly. First quarter earnings reports began this past week, largely with banks reporting. I will research selected earnings reports carefully and the associated commentary of company management (and analysts) each day for the next several weeks. As always during earnings reporting season like that which we have now entered, focus will be on identifying investing opportunities -- at the country, sector, industry, and company levels. Establishing
new positions will be limited primarily to companies that have reported their quarterly
earnings and therefore have no intervening earnings report prior to the May 15th
monthly options expiration date. Given that we are now in recession and that 2nd quarter earnings will undoubtedly be atrocious, the most likely outcome in the near term is that stocks will decline from their current level (i.e. S&P 500 at 2,875). This sentiment is consistent with the Covered Calls Advisor's Overall Market Meter outlook of 'Bearish' (see right sidebar). Consequently, new Covered Calls positions will be hedged by establishing Covered Calls at moderately in-the-money strike prices (to provide substantial downside protection).
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 specifically to this blog or to Covered Calls investing in general.
Best Wishes and Godspeed,
Jeff Partlow
