As detailed below, a very attractive +1.0% absolute return in 8 days (equivalent to a +43.4% annualized return-on-investment) was achieved for this position. The Covered Calls Advisor is pleased with this result since the annualized return of +43.4% that has been achieved was greater than the +35.1% annualized roi that might have been achieved in the future if the stock price remains above the strike price at market close on the March 5th, 2021 options expiration date.
Raytheon Technologies Corporation (RTX) -- Early Assignment of Covered Calls Position
The buy/write transaction was:
02/17/2021 Sold 2 Raytheon 03/05/2021 $70.00 Call options @ $3.06
Note: the Time Value (aka Extrinsic Value) in the Call options was $.66 per share = [$3.06 Call options premium - ($72.40 stock price - $70.00 strike price)] when this transaction executed.
02/24/2021 Early Assignment of 2 Raytheon 3/5/2021 $70.00 Call options, so 200 shares of RTX stock were sold at the $70.00 strike price and the RTX Covered Calls position was thereby closed out.
The overall performance results (including commissions) for this Raytheon Covered Calls position are as follows:
Covered Calls Cost Basis: $13,869.34
= ($72.40 - $3.06) * 200 shares + $1.34 commission
Net Profit Components:
(a) Options Income: +$612.00
= ($3.06 * 200 shares)
(b) Dividend Income (If option exercised early on Feb. 24th, 2021, the business day prior to the Feb. 25th ex-div date): +$0.00
(c) Capital Appreciation (Raytheon Call options assigned early on February 24th): -$480.00
+($70.00 sale at strike price - $72.40 stock purchase price) * 200 shares
+($70.00 sale at strike price - $72.40 stock purchase price) * 200 shares
Total Net Profit [Call options exercised early on February 24th (business day prior to Feb. 25th ex-dividend date)]: +$132.00
= (+$612.00 options income +$0.00 dividend income -$480.00 capital appreciation)
Absolute Return: +1.0%
= +$132.00/$13,869.34
Annualized Return-on-Investment: +43.4%
= (+$132.00/$13,869.34) * (365/8 days)
