November 6th, 2020 Options Expiration Results

The Covered Calls Advisor Portfolio had two positions with November 6th, 2020 options expirations. Last Friday, both positions closed in-the-money, so the maximum potential return-on-investment results were achieved as follows:

• Citigroup Inc. (C) -- +1.9% absolute return (equivalent to +63.4% annualized) for the 11 days of this investment; and  
• Morgan Stanley (MS) -- +2.3% absolute return (equivalent to +43.4% annualized) for the 19 days of this investment

Details for each position are provided below.  The cash now available from closing these positions will be retained until new Covered Calls and/or 100% Cash-Secured Puts positions are established.  

1.  Citigroup Inc. (C) -- Covered Calls Position Closed by Assignment at Options Expiration Date
The transactions were:
10/27/2020 Bought 300 Citigroup shares @ $42.09
10/27/2020 Sold 3 Citigroup 11/06/2020 $40.00 Call options @ $2.34
10/30/2020 Quarterly ex-dividend of $.51 per share
11/06/2020 Three Citi Call options closed in-the-money (with the stock price at $42.71 above the $40.00 strike price), so the options expired and the 300 shares of Citigroup stock were sold at the $40.00 strike price.

The overall performance results (including commissions) for this
Citigroup Covered Calls position were as follows:
Covered Calls Cost Basis: $11,927.01
= ($42.09 - $2.34) *300 + $2.01 commission

Net Profit Components:
(a) Options Income: +$702.00
= ($2.34*300 shares)
(b) Dividend Income (Citi shares assigned at Nov 6th, 2020 expiration): +$153.00
= ($.51 dividend per share x 300 shares)
(c) Capital Appreciation (Citi shares assigned at $40.00 strike price at options expiration): -$627.00
+($40.00-$42.09)*300 shares

 Total Net Profit (Citi shares assigned at $40.00 at Nov 6th, 2020 expiration): +$228.00

= (+$702.00 options income +$153.00 dividend income -$627.00 capital appreciation)
 

Absolute Return: +1.9%

= +$228.00/$11,927.01

Annualized Return: +63.4%

= (+$228.00/$11,927.01)*(365/11 days)

2.  Morgan Stanley (MS) -- Covered Calls Position Closed by Assignment at Options Expiration Date
The buy/write transaction was:
10/19/2020 Bought 200 Morgan Stanley shares @ $51.06
10/19/2020 Sold 2 Morgan Stanley 11/06/2020 $49.00 Call options @ $2.80
10/29/2020 Quarterly ex-dividend of $.35 per share
11/06/2020 Two Morgan Stanley Call options closed in-the-money (with the stock price at $51.70 above the $49.00 strike price), so the options expired and the 200 shares of MS stock were sold at the $49.00 strike price.

The overall performance results (including commissions) for this Morgan Stanley Covered Calls position were as follows:
Covered Calls Cost Basis: $9,653.34
= ($51.06 - $2.80) * 200 shares + $1.34 commission

Net Profit Components:
(a) Options Income: +$560.00
= ($2.80 * 200 shares)
(b) Dividend Income (Morgan Stanley shares assigned at Nov 6th, 2020 expiration): +$70.00
= ($.35 dividend per share x 200 shares)

(c) Capital Appreciation (MS shares assigned at $49.00 strike price at options expiration): -$412.00
+($49.00 - $51.06) * 200 shares

Total Net Profit (Morgan Stanley shares assigned at $49.00 strike price at November 6th, 2020 expiration): +$218.00

= (+$560.00 options income +$70.00 dividend income -$412.00 capital appreciation)

Absolute Return: +2.3%

= +$218.00/$9,653.34

Annualized Return: +43.4%

= (+$218.00/$9,653.34)*(365/19 days)

Best Wishes,
Jeff Partlow