As detailed below, two potential return-on-investment results are:
- -2.0% absolute return (equivalent to -9.0% annualized return over a period of 81 days) if the stock price is unchanged from today's price of $63.56 on the July 16th, 2021 options expiration date; OR
- +0.1%
absolute return (equivalent to +0.5% annualized return over 81 days) if the stock is assigned at the $65.00 strike price on the July 16th, 2021 options expiration date.
Hologic Inc. (HOLX) -- Continuation of Covered Calls Positon
The buy/write transaction was as follows:
04/27/2021 Bought 200 shares of Hologic stock @ $72.92 per share
04/27/2021 Sold 2 Hologic May 21st, 2021 $70.00 Call options @ $4.48 per share
Note: The Implied Volatility of the Call options was 36.1 when this transaction was executed.
05/11/2021 Bought-to-Close 2 HOLX May 21st, 2021 $70.00 Call Options @ $.17 per share and simultaneously Sold-to-Open 2 HOLX $65.00 Calls @ $2.65 per share.
Note: the stock price was $64.58 when this credit spread transaction was executed.
05/22/2021 Sold 2 HOLX July 16th, 2021 $65.00 Call options @ $1.05 per share against the existing 200 long shares of HOLX in the Covered Calls Advisor Portfolio.
Two possible overall performance results (including commissions) would be as follows:
Covered Calls Cost Basis: $13,689.34
= ($72.92 - $4.48) * 200 shares + $1.34 commission
Net Profit Components:
(a) Options Income: +$1,598.65
= ($4.48 - $.17 + $2.65 + $1.05) * 200 shares - $3.35 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If Hologic stock price is unchanged at $63.56 at the July 16th, 2021 options expiration date): -$1,872.00
= ($63.56 - $72.92) * 200 shares; OR
(c) Capital Appreciation (If Hologic stock price closes above the $65.00 strike price and is assigned at the July 16th, 2021 options expiration date): -$1,584.00
= ($65.00 -$72.92) * 200 shares
(a) Total Net Profit (If Hologic stock price is unchanged at $63.56 at the July 16th, 2021 options expiration date): -$273.35
= (+$1,598.65 Call options income +$0.00 dividend income -$1,872.00 capital appreciation); OR
(b) Total Net Profit (If Hologic stock price closes above the $65.00 strike price and is assigned at the July 16th, 2021 options expiration date): +$14.65
= (+$1,598.65 Call options income +$0.00 dividend income -$1,584.00 capital appreciation)
1. Absolute Return-on-Investment (If Hologic stock price is unchanged at $63.56 at the July 16th, 2021 options expiration date): -2.0%
= -$273.35/$13,689.34
Equivalent Annualized Return-on-Investment: -9.0%
= (-$273.35/$13,689.34)*(365/81 days); OR
2. Absolute Return-on-Investment (If Hologic stock price closes above the $65.00 strike price and is assigned at the July 16th, 2021 options expiration date): +0.1%
= +$14.65/$13,689.34
Equivalent Annualized Return-on-Investment: +0.5%
= (+$14.65/$13,689.34)*(365/81 days)
