April 30th, 2021 Options Expiration Results

The Covered Calls Advisor Portfolio had two Covered Calls positions (Alibaba Group Holdings Ltd. and Applied Materials Inc.) with April 30th, 2021 options expirations.  Both positions closed in-the-money, so the maximum potential return-on-investment results were achieved for these positions.   The results were:

• Alibaba Group Holdings Ltd. (BABA) -- +1.3% absolute return (equivalent to +42.7% annualized roi) for the 11 days of this investment
• Applied Materials Inc. (AMAT) -- +1.5% absolute return (equivalent to +45.0% annualized roi) for the 12 days of this investment
  

The cash now available from the assignment (i.e. closing) of the two in-the-money positions will be retained until new Covered Calls and/or 100% Cash-Secured Puts positions are established.  Given the Covered Calls Advisor's currently cautious Overall Market outlook, new positions will be hedged by continuing to establish Covered Calls at moderately in-the-money strike prices with good downside protection. 

The detailed transactions and results for these two closed positions are as follows:

1. Alibaba Group Holdings Ltd. (BABA) -- Covered Call Closed by Assignment at Expiration

The buy/write transaction was as follows:
04/20/2021 Bought 100 shares of Alibaba stock @ $229.44 per share 
04/20/2021 Sold 1 Alibaba April 30th, 2021 $225.00 Call option @ $7.30 per share
Note: The Implied Volatility of the Call option was 29.2 when this transaction was executed.
04/30/2021 Alibaba shares were in-the-money at options expiration so the option expired and the 100 shares were assigned (i.e. sold) at the $225.00 strike price.  

The overall performance result (including commissions) was as follows:
Covered Call Cost Basis: $22,214.67
= ($229.44 - $7.30) * 100 shares + $.67 commission

Net Profit Components:
(a) Option Income: +$730.00
= ($7.30 * 100 shares)
(b) Dividend Income: +$0.00 
(c) Capital Appreciation (BABA stock was above $225.00 strike price at April 30th, 2021 expiration): -$444.00
= ($225.00 -$229.44) * 100 shares

Total Net Profit: +$286.00
= (+$730.00 Call option income +$0.00 dividend income -$444.00 capital appreciation)

Absolute Return-on-Investment: +1.3%
= +$286.00/$22,214.67
Equivalent Annualized Return-on-Investment: +42.7%
= (+$286.00/$22,214.67)*(365/11 days)

2.  Applied Materials Inc. -- Covered Calls Position Closed by Assignment at Expiration
The buy/write transaction was:
04/19/2021 Bought 300 Applied Materials Inc. shares @ $129.45
04/19/2021 Sold 3 AMAT April 30th, 2021 $125.00 Call options @ $6.27
Note: the Open Interest in the Calls was 212 contracts.
04/30/2021 300 AMAT shares were in-the-money at options expiration so the three options expired and the 300 shares were assigned (i.e. sold) at the $125.00 strike price.

The overall performance result (including commissions) for this Applied Materials Covered Calls position was as follows:
Covered Calls Position Cost Basis: $36,896.01
= ($129.45 stock price -$6.27 options price) *300 shares +$2.01 commissions

Net Profit:
(a) Options Income: +$1,881.00
= ($6.27 * 300 shares)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (300 AMAT shares assigned at $125.00 strike price at April 30th options expiration): -$1,335.00
= ($125.00-$129.45) * 300 shares

Total Net Profit (AMAT shares assigned at $125.00 at options expiration): +$546.00

= (+$1,881.00 options income +$0.00 dividend income -$1,335.00 capital appreciation)

Absolute Return: +1.5%

= +$546.00/$36,896.01

Annualized Return: +45.0%

= (+$546.00/$36,896.01)*(365/12 days)

Please email me with any questions or comments related to anything related to Covered Calls investing.

Best Wishes and Godspeed,
Jeff Partlow
partlow@cox.net