Closed Covered Calls Position in KB Home

The Covered Calls Advisor decided to close out the Covered Calls position in KB Home (ticker KBH).  The stock has declined from $48.49 when this Covered Calls position was established on April 30th, 2021 to $43.79 this morning when the 300 KBH shares were sold.  Although the demand for new homes remains strong, continued downside is possible because of a slower new builds rate (from dramatic cost increase in lumber and other materials and also from a shortage of skilled construction labor).  The Covered Calls Advisor also believes the probability is relatively high that interest rates will continue to trend higher this year which is also not supportive of higher homebuilder stock prices.  

As detailed below, the return-on-investment result was -3.2% absolute return in 24 days (equivalent to a -48.3% annualized return-on-investment).

KB Home (KBH) -- Covered Calls Position Closed
The Buy/Write transaction was as follows:
04/30/2021 Bought 300 KB Home shares @ $48.49
04/30/2021 Sold 3 KB Home 05/21/2021 $46.00 Call options @ $3.11
Note: the Time Value (aka Extrinsic Value) in the Call options was $.62 per share = [$3.11 Call options premium - ($48.49 stock price - $46.00 strike price)]
05/05/2021 Quarterly ex-dividend of $.15 per share
05/21/2021 KBH share closed out-of-the-money at the options expiration date.  The stock price closed at $43.54 (below the $46.00 strike price).
05/24/2021 Sold 300 shares at $43.79 to close the KBH position.

The overall performance result (including commissions) for this KB Home Covered Calls position was as follows:
Covered Calls Cost Basis: $13,616.01
= ($48.49 - $3.11) * 300 shares + $2.01 commission

Net Profit Components:
(a) Options Income: +$933.00
= ($3.11 * 300 shares)
(b) Dividend Income: +$45.00
= ($.15 dividend per share x 300 shares)
(c) Capital Appreciation (KBH shares sold at $43.79 per share): -$1,410.00
+($43.79 - $48.49) * 300 shares

Total Net Profit: -$432.00

= (+$933.00 +$45.00 -$1,410.00)
 

Absolute Return: -3.2%

= -$432.00/$13,616.01

Annualized Return (If KB Home shares assigned at $38.00 at Feb 19th, 2021 expiration): -48.3%

= (-$432.00/$13,616.01) * (365/24 days)