Early Assignment of CVS Health Corp. Covered Calls

Early this morning, the Covered Calls Advisor received email and text notifications from my broker (Schwab) that three CVS Health Corp. (ticker symbol CVS) Call options were exercised early, so the 300 shares of CVS stock in the Covered Calls Advisor Portfolio were assigned (i.e. sold) at the $60.00 strike price. 

Details of the transactions and the results for this CVS Health Corp. position are provided below.  When this Covered Calls position was established, the time value (i.e. extrinsic value) was $.90 = [$3.35 options premium - ($62.45 stock price - $60.00 strike price)].  By yesterday's market close (the last business day prior to the July 22nd, 2020 ex-dividend date), the stock price has increased from $62.45 when the position was originally established (on July 8th) to $64.02 at yesterday's market close and the time value had declined to $0.00.  So, the full $.90 options income profit per share potential was achieved upon the early assignment closing of this position.  CVS' $.50 per share ex-dividend date is today, so the owner of the Calls exercised their option yesterday to buy the shares at the $60.00 strike price, so they will receive the $.50 per share dividend payment.

As detailed below, this early assignment provided a return-on-investment (roi) result for the Covered Calls Advisor Portfolio of +1.5% absolute return (equivalent to +39.7% annualized roi for the 14 days this position was held. The Covered Calls Advisor is pleased with this early assignment since the +39.7% annualized roi achieved exceeds the +36.0% that might have been achieved if the position was instead assigned on the July 31st options expiration date. 

CVS Health Corp. (CVS) -- Covered Calls Position Closed by Early Assignment
The buy/write transaction was:

07/08/2020 Bought 300 CVS shares @ $62.45
07/08/2020 Sold 3 CVS 7/31/2020 $60.00 Call options @ $3.35
Note: The Call options Open Interest was 512 contracts.
07/21/2020 Early exercise of 3 CVS July 31st, 2020 $60.00 Call options, so 300 CVS shares were assigned (i.e. sold) at the $60.00 strike price.

The overall performance results (including commissions) for this CVS Health Covered Calls position were as follows:
Covered Calls Cost Basis: $17,732.01
= ($62.45 - $3.35) * 300 shares + $2.01 commission

Net Profit Components:
(a) Options Income: +$1,005.00
= ($3.35 * 300 shares)
(b) Dividend Income (Call options exercised early on July 21st, the business day prior to the July 22nd ex-div date): +$0.00

(c) Capital Appreciation: -$735.00
+($60.00 strike price - $62.45 stock purchase price) * 300 shares

Total Net Profit: [Call options exercised on July 21st (business day prior to the July 22nd ex-dividend date)]: +$270.00

= (+$1,005.00 options income +$0.00 dividend income -$735.00 capital appreciation)

Absolute Return: +1.5%

= +$270.00/$17,732.01

Annualized Return: +39.7%

= (+$270.00/$17,732.01)*(365/14 days)

Testing your Covered Calls Knowledge: 
When and why is a Covered Calls position most likely to be assigned early?  Also, briefly describe why this could be a good or bad result for the Covered Calls investor.
Email me at partlow@cox.net with your answer and I will send you an email reply in return.

Best Wishes to All,
Jeff Partlow