Today the Covered Calls Advisor decided to close the Covered Calls position in Citizens Financial Group, Inc. early (i.e. prior to the February 19th options expiration date). The detailed post when this position was originally established is here: link
There are still 15 days remaining until the February 19th, 2021 options expiration date, but the stock has increased from its original $36.99 purchase price on January 25th to $40.34 today. The position was closed early because there was only $.10 per share time value remaining in the Call options. There was $.46 time value = [$35.00 strike price - ($36.99 stock purchase price - $2.45 Call options price)] when the position was established, so $.36 profit per share ($.46 - $.10) was captured in only 10 days this Covered Calls position was held. In addition, the CFG quarterly ex-dividend of $.39 per share on February 2nd, 2021 was captured. As detailed below, the absolute return-on-investment achieved was +2.2% (equivalent to an annualized roi of +78.5% for the 10-day holding period). For comparison, if the Covered Calls position had instead been held until the February 19th, 2021 expiration date and the stock remained above the $35.00 strike price, then the absolute roi would be +2.5% and the annualized roi would be +34.5%.
Citizens Financial Group Inc. (CFG) -- Covered Calls Position Closed
The buy/write transaction was:
01/25/2021 Sold 4 Citizens Financial 02/19/2021 $35.00 Call options @ $2.45
Note: the Time Value (aka Extrinsic Value) in the Call options was $.46 per share = [$2.45 Call options premium - ($36.99 stock price - $35.00 strike price)]
02/02/2021 Quarterly ex-dividend of $.39 per share
02/04/2021 Covered Calls Unwind transaction: Simultaneous Sold-to-Close 400 shares of CFG @ $40.34 and Bought-to-Close 4 CFG 2/19/2021 $35.00 Call options @ $5.44 -- a net credit of $34.90 per share.
The overall performance result (including commissions) for this Citizens Financial Covered Calls position was as follows:
Covered Calls Cost Basis: $13,818.68
= ($36.99 - $2.45) * 400 shares + $2.68 commission
Net Profit Components:
(a) Options Income: -$1,198.68
= ($2.45 - $5.44) * 400 shares - $2.68 commission
(b) Dividend Income: +$156.00
= ($.39 dividend per share x 400 shares)
+($40.34 - $36.99) * 400 shares
