Roll Up-and-Out Lennar Corp. Covered Calls

When Lennar Corp. (ticker symbol LEN) shares were trading at $83.58 this afternoon and the existing Covered Calls position of January 29th, 2021 at the $72.50 strike price, the two Call options were bought-to-close at $11.18 per share.  They were relatively deep-in-the-money and had only $.10 time value remaining [$11.18 options price - ($83.58 stock price - $72.50 strike price)], so the Covered Calls Advisor decided to roll-up-and-out to the February 19th, 2021 $77.50 Calls at $7.50 per share.   This remains a moderately conservative in-the-money position since the Delta for these new Calls when this rollout transaction was executed was 75.3 which closely approximates the probability of assignment at options expiration (i.e. 75.3% probability).  The transaction history and two potential return-on-investment results for this Lennar Corp. Covered Calls position are detailed below.  There is an ex-dividend on January 28th of $.25 per share which is included in the calculations below. As preferred by the Covered Calls Advisor, there is no quarterly earnings report for Lennar prior to the February 19th, 2021 options expiration date.

As detailed below, two potential return-on-investment results for this Lennar Corp position are: (1) +3.3% absolute return in 15 days (equivalent to a +81.0% annualized return-on-investment) if assigned early on January 27th (the day prior to the Jan. 28th ex-dividend date); or (2) +3.7% absolute return in 38 days (equivalent to a +35.3% annualized return-on-investment) if the stock closes above the $77.50 strike price at expiration.

Lennar Corp. (LEN) -- Continuation of Covered Calls Position
The buy/write transaction was:
01/13/2021 Bought 200 Lennar Corp. shares @ $76.39
01/13/2021 Sold 2 LEN 01/29/2021 $72.50 Call options @ $4.96
Note: the Implied Volatility of the Call options was 37.5 when this position was transacted and the Delta (approximately the probability of assignment at expiration) was 73.3.
01/20/2021 Roll-Up-and-Out transaction: Bought-to-Close 2 LEN Jan. 29th, 2021 $72.50 Call options at $11.18 per share and simultaneously Sold-to-Open 2 LEN February 19th, 2021 $77.50 Calls at $7.50 per share. This roll-up-and-out transaction occurred at a net debit of $3.68 ($11.18 - $7.50) per share and the price of Lennar's stock was $83.58 when this transaction was executed.
01/28/2021 Upcoming quarterly ex-dividend of $.25 per share

Two possible overall performance results (including commissions) for this Lennar Corp. Covered Calls position are as follows:
Covered Calls Cost Basis: $14,287.34
= ($76.39 - $4.96) * 200 shares + $1.34 commission

Net Profit Components:
(a) Options Income: +$253.32
= ($4.96 -$11.18 + $7.50 ) * 200 shares - $2.68 commissions
(b) Dividend Income (If option exercised early on January 27th, 2021 the business day prior to the Jan. 28th ex-div date): +$0.00; or
(b) Dividend Income (If Lennar stock assigned at the February 19th, 2021 options expiration): +$50.00
= ($.25 dividend per share x 200 shares)

(c) Capital Appreciation (If LEN Call option assigned early on Jan. 27th): +222.00
+($77.50 - $76.39) * 200 shares; or
(c) Capital Appreciation (If shares assigned at $77.50 strike price at options expiration): +222.00
+($77.50 - $76.39) * 200 shares

1. Total Net Profit [If option exercised on Jan. 27th (business day prior to Jan. 28th, 2021 ex-dividend date)]: +$475.32

= (+$253.32 options income +$0.00 dividend income +$222.00 capital appreciation); or

2. Total Net Profit (If LEN shares assigned at $77.50 at Feb. 19th, 2021 expiration): +$525.32

= (+$253.32 +$50.00 +$222.00)

1. Absolute Return [If option exercised on business day prior to the Jan. 28th ex-dividend date]: +3.3%

= +$475.32/$14,287.34

Annualized Return-on-Investment (If option exercised early): +81.0%

= (+$475.32/$14,287.34)*(365/15 days); or

2. Absolute Return (If Lennar shares assigned on Feb. 19th options expiration date): +3.7%

= +$525.32/$14,287.34

Annualized Return-on-Investment (If LEN shares assigned at $77.50 at February 19th, 2021 expiration): +35.3%

= (+$525.32/$14,287.34)*(365/38 days)