Roll-Up-and-Out Goldman Sachs Group Inc. Covered Call

The Covered Calls Advisor recently established a Covered Call in Goldman Sachs (ticker GS) at the September 4th, 2020 $197.50 strike price.  The price of the 100 Goldman Sachs shares have increased from the purchase price of $201.36 to $209.23 today when this roll-up-and-out transaction was executed.  The $1.25 quarterly ex-dividend is Monday and there was only $.05 [$11.68 Call options price - ($209.13 share price - $197.50 strike price)] of time value remaining in the Sept 4th $197.50 Call options.  With such a low ($.05 per share) time value remaining, it was likely that the Call options owner would choose to exercise their option so that the 100 shares of Goldman Sachs stock owned in the Covered Calls Advisor Portfolio would be assigned (i.e. sold) at the $197.50 strike price to the owner of the Calls.

The Covered Calls Advisor decided to roll up this Covered Calls position from the $197.50 strike to the $205.00 strike at the Sept 18th, 2020 options expiration date for a $7.73 per share premium income. 

A potential return-on-investment result for this Goldman Sachs Covered Calls since its inception on August 18th, 2020  is +3.9% absolute return in 32 days (equivalent to a +44.4% annualized return-on-investment).  By rolling up the original Covered Calls, this result would exceed the +1.4% absolute return for 13 days (+40.7% annualized) that would have been achieved if the stock was assigned early today at the $197.50 strike price.

The detailed transactions and a potential result are provided below.   

Goldman Sachs Group Inc. (GS) -- New Covered Call Position

The buy/write transaction was as follows:
08/18/2020 Bought 100 shares of Goldman Sachs stock @ $201.36 per share 
08/18/2020 Sold 1 Sept 4th, 2020 $197.50 Call option @ $6.68 per share
Note: The Implied Volatility of the Call option was 24.8.
08/28/2020 Bought-to-Close 1 GS 9/04/2020 $197.50 Call option @ $11.68 per share
08/28/2020  Sold-to-Open 1 GS 9/18/2020 $205.00 Call option @ $7.73 per share
Note: this was a simultaneous roll up transaction
08/31/2020 Upcoming quarterly ex-dividend of $1.25 per share

A possible overall performance result (including commissions) for this Goldman Sachs Covered Call position is as follows:
Covered Call Cost Basis: $19,468.67
= ($201.36 - $6.68) * 100 shares + $0.67 commission

Net Profit Components:
(a) Options Income: +$268.31
= ($6.68 - $11.68 + $7.73) * 100 shares - $4.69 commissions
(b) Dividend Income: +$125.00
= ($1.25 dividend per share x 100 shares)

(c) Capital Appreciation (If Goldman Sachs shares assigned at $205.00 strike price at options expiration): +$364.00
+($205.00 - $201.36) * 100 shares

Total Net Profit (If Goldman Sachs shares assigned at $205.00 at Sept 18th, 2020 expiration): +$757.31

= (+$268.31 +$125.00 +$364.00)

Absolute Return (If Goldman Sachs shares assigned at $205.00 at Sept 18th, 2020 options expiration): +3.9%

= +$757.31/$19,468.67

Annualized Return (If Goldman Sachs shares assigned at $205.00 at Sept 18th, 2020 expiration): +44.4%

= (+$757.31/$19,468.67)*(365/32 days)