As detailed below, the return-on-investment result for this American International Group Covered Calls position was +2.3% absolute return in 6 days (equivalent to a +141.7% annualized return-on-investment). This result is preferable than the +71.4% annualized roi that would have been achieved if the stock would have remained above the $28.00 strike price and therefore instead been assigned on the Sept. 25th options expiration date.
American International Group Inc. (AIG) -- Covered Calls Position Closed
The buy/write transaction was:
09/10/2020 Sold 3 AIG 9/25/2020 $28.00 Call options @ $1.35
Note: The Implied Volatility of the Call options was 36.7 when this position was transacted.
09/16/2020 Quarterly ex-dividend of $.32 per share
09/16/2020 Closed AIG Covered Calls position by simultaneously selling 300 AIG shares @ $29.83 and buying-to-close 3 AIG 9/25/2020 $28.00 Call options @ $2.05 per share.
The overall performance result (including commissions) for this American International Group Covered Calls position was as follows:
Covered Calls Cost Basis: $8,240.01
= ($28.81 - $1.35) * 300 shares + $2.01 commission
Net Profit Components:
(a) Options Income: -$210.00
= ($1.35 - $2.05) * 300 shares
(b) Dividend Income: +$96.00
= ($.32 dividend per share x 300 shares)
(c) Capital Appreciation (AIG shares sold at $29.83 market price): +$306.00
= +($29.83 - $28.81) * 300 shares
Total Net Profit: +$192.00
= (-$210.00 options income +$96.00 dividend income +$306.00 capital appreciation)
Absolute Return: +2.3%
= +$192.00/$8,240.01
Annualized Return: +141.7%
= (+$192.00/$8,240.01)*(365/6 days)
