Medtronic PLC (MDT) -- Closed Covered Calls Position by Assignment at Expiration
The Buy/Write transaction was as follows:
09/21/2020 Bought 200 Medtronic PLC shares @ $103.41
09/21/2020 Sold 2 MDT 10/02/2020 $100.00 Call options @ $4.03
Note 1: the Implied Volatility of the Calls was 25.0 when this transaction executed.
Note 2: the Time Value (aka Extrinsic Value) in the Call options was $.62 per share = [$4.03 Call options premium - ($103.41 stock price - $100.00 strike price)]
09/24/2020 Quarterly ex-dividend of $.58 per share x 200 shares = $116.00
10/02/2020 2 MDT 10/02/2020 $100.00 Call options expired with the $101.96 per share stock price above the strike price. So, the 200 shares were assigned (i.e. sold) at the $100.00 strike price.
The overall performance result (including commissions) for this Medtronic Covered Calls position was as follows:
Covered Calls Cost Basis: $19,877.34
= ($103.41 - $4.03) * 200 shares + $1.34 commission
Net Profit Components:
(a) Options Income: +$806.00
= ($4.03 * 200 shares)
(b) Dividend Income (If Medtronic stock assigned at Oct. 2nd, 2020 expiration): +$116.00
= ($.58 dividend per share x 200 shares)
(c) Capital Appreciation (If MDT shares assigned at $100.00 strike price at options expiration): -$682.00
+($100.00 - $103.41) * 200 shares
= (+$806.00 options income +$116.00 dividend income -$682.00 capital appreciation)
Absolute Return: +1.2%
= +$240.00/$19,877.34
Annualized Return: +36.7%
= (+$240.00/$19,877.34)*(365/12 days)
= (+$240.00/$19,877.34)*(365/12 days)
