The Covered Calls Advisor Portfolio had thirteen positions since last month's (January 15th, 2021) monthly options expiration date. Eleven of these were closed in-the-money -- (1) Four expired in-the-money on the February 19th, 2021 monthly options expiration date; (2) Five expired in-the-money on their weekly options expiration date; (3) One was closed on the day prior to the ex-dividend date by Early Assignment; and (4) One Covered Calls position was unwound (closed out prior to its options expiration date) to achieve a significantly greater annualized return-on-investment than would have occurred if it was instead assigned on its initial expiration date). For all eleven positions, very attractive annualized return-on-investment results were achieved. The other two Covered Calls (GoHealth Inc. and Pfizer Inc.) expired on the February 19th expiration date with their Call options out-of-the-money (stock price below the strike price), so these long stock positions now remain in the Covered Calls Advisor Portfolio.
These thirteen Covered Calls positions demonstrate some important concepts of Covered Calls investing: (1) Good stock selection is Job #1; (2) Thoughtful strike price and options expiration date selection are very important considerations when initiating a position; and (3) Daily active monitoring of positions is helpful for identifying position management opportunities (such as closing out a position or rolling a position) prior to its options expiration date. The results for the thirteen positions during the past month are summarized as follows:
- Four Covered Call positions expired in-the-money yesterday on the February 19th, 2020 monthly options expiration date, so the Call options expired and the stocks were sold at their strike price. The return-on-investment results were as follows:
- Citigroup Inc. (C) -- +2.7%
absolute return in 36 days (equivalent to +26.9% annualized
return-on-investment). -- Link to Details of Original Citigroup Position
- Capital One Financial Corp. (COF) -- +1.1%
absolute return in 9 days (equivalent to +45.6% annualized
return-on-investment). -- Link to Details of Original Capital One Position
- KB Home (KBH) -- +2.4% absolute
return in 25 days (equivalent to +34.9% annualized return-on-investment). -- Link to Details of Original KB Home Position
- WestRock Company (WRK) -- +1.1% absolute return in 12 days (equivalent to +32.9% annualized return-on-investment). -- Link to Details of Original WestRock Position
- Five Covered Call positions expired in-the-money on their weekly options expiration dates (after last month's January 15th expiration date but prior to this month's February 19th, 2021 monthly options expiration date). The stocks were assigned (i.e. sold) at their strike prices with the following results:
- Lowe's Companies Inc. (LOW): +1.3%
absolute return in 17 days (equivalent to +27.3% annualized
return-on-investment). -- Link to Details of Original Lowe's Cos. Position
- Alibaba Group Holdings Ltd. (BABA): +4.2% absolute return in 53 days (equivalent to +28.8% annualized return-on-investment). -- Link to Results of Alibaba Position
- DraftKings Inc. (DKNG): +10.6% absolute return in 57 days (equivalent to +68.2% annualized return-on-investment). -- Link to Results of DraftKings Position
- Facebook Inc. (FB): +4.7% absolute return in 29 days (equivalent to +59.0% annualized return-on-investment). -- Link to Results of Facebook Position
- Morgan Stanley (MS): +1.8%
absolute return in 16 days (equivalent to +40.2% annualized
return-on-investment). -- Link to Results of Morgan Stanley Position
- One Covered Calls position in IBM Corp. was closed by Early Assignment on February 8th, 2020 (the last trading day prior to their ex-dividend date) so the stock was assigned (i.e. sold) at its $115.00 strike price with the following result: +0.7% absolute return in 6 days (equivalent to +44.8% annualized return-on-investment).
- One Covered Calls position in Citizens Financial Group Inc. (CFG) was closed early by the Covered Calls Advisor on February 4th, 2021. The stock had increased in price and with only $.10 time value remaining in the Call options but 15 days remaining until the options expiration date, the Covered Calls Advisor closed out the position with a Covered Calls unwind transaction -- 4 CFG 2/19/2021 $35.00 Calls were bought-to-close and 400 shares were simultaneously sold-to-close out the position entirely. A +2.2% absolute
return in 10 days (equivalent to +78.5% annualized return-on-investment) was achieved for this position.
- Finally, two February 19th, 2021 Covered Call positions (GoHealth Inc. and Pfizer Inc.) expired out-of-the-money, so their Call options expired and the two long stock positions remain in the Covered Calls Advisor Portfolio. A decision will be made early next week for these two companies to either sell these shares or
to continue
with the Covered Calls positions by selling future Call options against
the shares currently held.
As shown in the right sidebar, there are currently ten open positions in
the Covered Calls Advisor Portfolio. All transactions and
return-on-investment results for these positions will be posted on
this blog site on the same day the transactions occur. As always, I welcome your emails whenever you have any comments or questions related to Covered Calls investing.
Best Wishes,
Jeff
partlow@cox.net
