With 400 GoHealth Inc. (ticker symbol GOCO) shares at $14.34 today and its Covered Calls of December 18th, 2020 at a $12.50 strike price being relatively deep-in-the-money, the Covered Calls Advisor decided to roll-up-and-out to the January 15th, 2021 Calls at the $15.00 strike price. These transactions were at $1.80 per share on the buy-to-close Dec 18th transaction and $.80 for the sell-to-open the January 15th, 2021 transaction. The transaction history and potential return-on-investment results for this GoHealth Covered Calls position are detailed below.
Despite the price decline since these GoHealth shares were initially purchased at $15.00 per share in August, the Covered Calls Advisor continues to be optimistic about GoHealth's current and future prospects. GoHealth is experiencing a large sales growth this quarter versus the same quarter last year because of their expansion of both insurance providers and geographies compounded by the growth in Medicare Advantage policies and the growing reliance by both providers and consumers on e-brokers such as GoHealth.
As detailed below, two potential return-on-investment results for this GoHealth Inc. position are: (1) +8.3% absolute
return in 144 days (equivalent to a +21.1% annualized
return-on-investment) if the stock price is unchanged at $14.34 at the January 15th, 2021 options expiration date; or (2) +13.1% absolute
return in 144 days (equivalent to a +33.1% annualized
return-on-investment) if the stock closes above the $15.00 strike price at expiration.
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.
10/16/2020 GOCO Call options expired since stock closed below the strike price
11/04/2020 Sold 4 GOCO Nov. 20th, 2020 $12.50 Call options at $.70 against the 400 shares of GoHealth stock to continue the GoHealth Covered Calls position.
Note: the price of GOCO was $11.82 today when these Call options were sold.
11/20/2020 GOCO Call options expired since stock closed below the strike price
12/04/2020
Sold 4 GOCO Dec. 18th, 2020 $12.50 Call options at $.30 against the 400
shares of GoHealth stock to continue the GoHealth Covered Calls
position.
Note: the price of GOCO was $11.62 today when these Call options were sold.
12/18/2020 Bought-to-Close 4 GOCO Dec. 18th $12.50 Calls at $1.80
Note: the stock price was $14.24 when this transaction was executed, so the time value remaining in these Calls was $.06 =[$1.80 Call options price - ($14.24 stock price - $12.50 strike price)]
12/18/2020 Sold-to-Open 4 GOCO Jan. 15th, 2021 Call options at $.80 per share.
Note: the price of GOCO stock was $14.34 when these Calls 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: +$729.28
= ($1.05 + $.80 + $.70 + $.30 - $1.80 + $.80) * 400 shares - $10.72 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If GoHealth stock is unchanged at $14.34 at Jan. 15th expiration): -$264.00
= ($14.34 - $15.00) * 400 shares; OR
(c) Capital Appreciation (If GoHealth stock is above $15.00 strike price at Jan. 15th expiration): +$0.00
= ($15.00 - $15.00) * 400 shares
1. Total Net Profit (If GOCO stock unchanged at $14.34 at options expiration): +$465.28
= (+$729.28 options income +$0.00 dividend income -$264.00 capital appreciation)
2. Total Net Profit (If GOCO stock closes above $15.00 at Jan. 15th options expiration): +$729.28
= (+$729.28 options income +$0.00 dividend income +$0.00 capital appreciation)
1. Absolute Return (If GoHealth stock price unchanged at $14.34 per share): +8.3%
= +$465.28/$5,582.68
Equivalent Annualized Return: +21.1%
= (+$465.28/$5,582.68)*(365/144 days)
2. Absolute Return (If stock closes above $15.00 strike price at options expiration): +13.1%
= +$729.28/$5,582.68
Equivalent Annualized Return: +33.1%
= (+$729.28/$5,582.68)*(365/144 days)
