Upon the September 18th, 2020 options expiration last Friday, the Covered
Calls position in GoHealth Inc. (ticker symbol GOCO) expired with
the stock price at $13.88, well below the $15.00 strike price. So, the September Call
options expired and the 400 shares of GoHealth Inc. stock were retained in the
Covered Calls Advisor Portfolio. Today, with the GoHealth stock price having risen recently, a sell-to-open order was executed (when the stock price was at $14.54) to sell 4 October 16th, 2020 Call
options at the $15.00 strike price for $.80 per share to continue this Covered Calls position.
As detailed below, two potential return-on-investment results for this GoHealth Inc. position are: (1) +10.0 absolute
return in 54 days (equivalent to a +67.3% annualized
return-on-investment) if the stock price is unchanged at $14.54 at the October 16th, 2020 options expiration; or (2) +13.3% absolute
return in 54 days (equivalent to a +89.6% annualized
return-on-investment) if the stock closes above the $15.00 strike price.
GoHealth Inc. (GOCO) -- Continuation of Covered Calls Position
The Buy/Write transaction was as follows:
08/24/2020 Bought 400 shares of GoHealth Inc. stock @ $15.00 per share
08/24/2020 Sold 4 GoHealth Sept 18th, 2020 $15.00 Call options @ $1.05 per share
Note: the Implied Volatility of these Calls was very high at 61.6 today when this transaction was made.
09/18/2020 GOCO Call options expired since stock closed below the strike price
09/23/2020 Sold 4 GOCO Oct 16th, 2020 $15.00 Call options at $.80 against the 400 shares of GoHealth stock to continue the GoHealth Covered Calls position.
Note: the price of GOCO was $14.54 today when these Call options were sold.
Two possible overall performance results (including commissions) are as follows:
Covered Call Cost Basis: $5,582.68
= ($15.00 - $1.05) * 400 shares + $2.68 commission
Net Profit Components:
(a) Options Income: +$740.00
= ($1.05 + $.80) * 400 shares
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If GoHealth stock is unchanged at $14.54 at Oct 16th expiration): -$184.00
= ($14.54 - $15.00) * 400 shares; OR
(c) Capital Appreciation (If GoHealth stock is above $15.00 strike price at Oct 18th expiration): +$0.00
= ($15.00 - $15.00) * 400 shares
1. Total Net Profit (If GOCO stock unchanged at $14.54 at options expiration): +$556.00
= (+$740.00 options income +$0.00 dividend income -$184.00 capital appreciation)
2. Total Net Profit (If GOCO stock closes above $15.00 at Oct 16th options expiration): +$740.00
= (+$740.00 options income +$0.00 dividend income +$0.00 capital appreciation)
1. Absolute Return (If GoHealth stock unchanged): +10.0%
= +$556.00/$5,582.68
Equivalent Annualized Return: +67.3%
= (+$556.00/$5,582.68)*(365/54 days)
2. Absolute Return (If stock closes above $15.00 strike price at options expiration): +13.3%
= +$740.00/$5,582.68
Equivalent Annualized Return: +89.6%
= (+$420.00/$5,582.68)*(365/54 days)
