Continuation of Covered Calls Position in LyondellBasell Industries N.V.

Today, the Covered Calls position in LyondellBasell Industries was continued by selling two July 16th, 2021 $105.00 Call options against the 200 shares held in the Covered Calls Advisor Portfolio.  The stock price has declined substantially from the original $112.54 purchase price to $104.01 today when the continuation of this LYB Covered Calls position was executed.  There is no negative news on the company since this position was originally established that causes the Covered Calls Advisor to change my original bullish outlook.  So, by continuing this position now, the Covered Calls Advisor is working to repair this currently losing position back to a profitable result. 

As detailed below, two potential return-on-investment results are: 

• -1.6% absolute return (equivalent to -12.0% annualized return for 50 days) if the stock price is unchanged from today's price of $104.01 on the July 16th, 2021 options expiration date; OR 

• -0.7% absolute return (equivalent to -5.4% annualized return for 50 days) if the stock is in-the-money and therefore assigned at the $105.00 strike price on the July 16th, 2021 options expiration date.

 

LyondellBasell Industries N.V. (LYB) -- Continuation of Covered Calls Position
The buy/write transaction was as follows:
05/28/2021 Bought 200 shares of LyondellBasell stock @ $112.54 per share 
05/28/2021 Sold 2 LyondellBasell June 18th, 2021 $110.00 Call options @ $3.82 per share
Note: the Implied Volatility of the Call options was 22.0.
06/04/2021 Upcoming ex-dividend of $1.13 per share
06/18/2021 Two LYB 6/18/2021 $110.00 Call options expired out-of-the-money and 200 long shares of LYB stock remain in the Covered Calls Advisor Portfolio
Note: the LYB stock price was $100.35 on the options expiration date.
07/01/2021 Sold 2 LYB 7/16/2021 $105.00 Call options @ $1.80 per share when the stock was trading at $104.01 to continue this Covered Calls position.

Two possible overall performance results (including commissions) would be as follows:
Covered Calls Cost Basis: $21,745.34
= ($112.54 - $3.82) * 200 shares + $1.34 commission

Net Profit Components:
(a) Options Income: +$1,121.32
= ($3.82 + $1.80) * 200 shares - $2.68 commission
(b) Dividend Income (If LyondellBasell stock price unchanged at $104.01 on the July 16th, 2021 options expiration date): +$226.000
= $1.13 dividend per share x 200 shares; OR
(b) Dividend Income (If LyondellBasell stock assigned at $105.00 strike price on July 16th options expiration date): $226.00
= $1.13 dividend per share x 200 shares
(c) Capital Appreciation (If LYB stock price unchanged at $104.01 on the July 16th, 2021 options expiration date): -$1,706.00
= ($104.01 - $112.54) * 200 shares; OR
(c) Capital Appreciation (If LyondellBasell stock is above $105.00 strike price at the July 16th expiration): -$1,508.00
= ($105.00 - $112.54) * 200 shares

1.  Total Net Profit (If LyondellBasell stock price unchanged at $104.01 on the July 16th, 2021 options expiration date): -$358.68
= (+$1,121.32 options income +$226.00 dividend income -$1,706.00 capital appreciation): OR
2.  Total Net Profit (If LYB stock assigned at $105.00 on July 16th options expiration date): -$160.68
= (+$1,121.32 options income +$226.00 dividend income -$1,508.00 capital appreciation)

1.  Absolute Return (If LYB stock price unchanged at $104.01 on the July 16th, 2021 options expiration date): -1.6%
= -$358.68/$21,745.34
Equivalent Annualized Return: -12.0%
= (-$358.68/$21,745.34) * (365/50 days); OR
2.  Absolute Return (If LyondellBasell stock assigned at $105.00 on July 16th options expiration date): -0.7%
= -$160.68/$21,745.34
Equivalent Annualized Return: -5.4%
= (-$160.68/$21,745.34) * (365/50 days)