The Covered Calls Advisor Portfolio had three Covered Call positions with a December 31st, 2020 options expiration date and the results are as follows:
1. Two D.R. Horton Inc. (DHI) $67.50 Covered Calls -- +1.4% absolute return in 16 days (equivalent to +32.2% annualized return-on-investment).
The Buy/Write transaction was as follows:
12/16/2020 Bought 200 shares of D.R. Horton Inc. stock @ $70.60 per share
12/16/2020 Sold 2 D.R. Horton Dec 31st, 2020 $67.50 Call options @ $4.04 per share
12/31/2020 2 DHI Calls expired and 200 shares assigned (i.e. sold) at the $67.50 strike price.
Note: the closing DHI stock price was $68.92 on the options expiration date.
The overall performance result (including commissions) was as follows:
Covered Call Cost Basis: $13,313.34
= ($70.60 - $4.04) * 200 shares + $1.34 commission
Net Profit Components:
(a) Options Income: +$808.00
= ($4.04 * 200 shares)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (D.R. Horton stock was above $67.50 strike price at the Dec 31st expiration): -$620.00
= ($67.50 - $70.60) * 200 shares
Total Net Profit: +$188.00
= (+$808.00 options income +$0.00 dividend income -$620.00 capital appreciation)
Absolute Return: +1.4%
= +$188.00/$13,313.34
Equivalent Annualized Return: +32.2%
= (+$188.00/$13,313.34)*(365/16 days)
2. One Facebook Inc. (FB) $255.00 Covered Call -- +0.9% absolute
return in 11 days (equivalent to +29.7% annualized return-on-investment). Facebook Inc. (FB) -- New Covered Call Position
12/21/2020 Bought 100 Facebook shares @ $268.37
12/21/2020 Sold 1 Facebook 12/31/2020 $255.00 Call option @ $15.63. The Implied Volatility of the Call option was 37.8 when this transaction occurred.
Note: the Time Value (aka Extrinsic Value) in the Call option was $2.26 per share = [$15.63 Call option premium - ($268.37 stock price - $255.00 strike price)]
12/31/2020 One FB Call option expired and 100 shares assigned (i.e. sold) at the $255.00 strike price.
Note: the closing Facebook stock price was $273.16 on the options expiration date.
The overall performance result (including commissions) for this Facebook Inc. Covered Call position was as follows:
Covered Calls Cost Basis: $25,274.67
= ($268.37 - $15.63) * 100 shares + $.67 commission
Net Profit Components:
(a) Option Income: +$1,563.00
= ($15.63 * 100 shares)
(b) Dividend Income (Facebook stock assigned at Dec. 31st, 2020 expiration): +$0.00
+($255.00 - $268.37) * 100 shares
3. One Alibaba Group Holding Ltd. (BABA) Covered Call at the $250.00 strike price was out-of-the-money (i.e. stock price below the strike price) on the December 31st, 2020 options expiration date so the Call option expired worthless and the 100 BABA shares remain in the Covered Calls Advisor Portfolio. A decision will be made soon to either sell the Alibaba shares or continue with this Covered Call position by selling one Call option against the 100 Alibaba shares currently held. As always, the transactions and return-on-investment results for this position will be posted on this blog site on the same day the transactions occur.
As shown in the right sidebar, there are currently ten open positions in the Covered Calls Advisor Portfolio with future options expiration dates. As always, any transactions and
return-on-investment results for these positions will be posted on
this blog site on the same day the transactions occur.
Best Wishes to All for a Happy (and Prosperous) New Year,
Jeff Partlow
