As detailed below, the return-on-investment result for this Caterpillar Inc. Covered Calls position was +1.1% absolute return in 20 days (equivalent to a +20.0% annualized return-on-investment).
Caterpillar Inc. (CAT) -- Covered Call Position Closed
The transaction was as follows:
07/13/2021 Bought 100 shares of Caterpillar stock @ $215.10 per share
07/13/2021 Sold 1 Caterpillar July 30th, 2021 $210.00 Call option @ $8.02 per share
Note: this was a simultaneous Buy/Write transaction
07/19/2021 $111.00 ex-dividend = ($1.11 per share x 100 shares)
07/30/2021 CAT shares closed out-of-the-money on the 7/30 options expiration date, so options expired and 100 shares remain in the Covered Calls Advisor Portfolio
08/02/2021 Closed CAT Covered Call position by selling 100 CAT shares @ $208.24 per share.
The overall performance result (including commissions) was as follows:
Covered Call Cost Basis: $20,708.67
= ($215.10 - $8.02)* 100 shares + $.67 commission
Net Profit Components:
(a) Option Income: +$802.00
= ($8.02* 100 shares)
(b) Dividend Income: +$111.00 = $1.11 per share x 100 shares
(c) Capital Appreciation (CAT shares sold at $208.24): -$686.00
= ($208.24 -$215.10) * 100 shares
Total Net Profit: +$227.00
= (+$802.00 option income +$111.00 dividend income -$686.00 capital appreciation)
Absolute Return: +1.1%
= +$227.00/$20,708.67
Equivalent Annualized Return-on-Investment: +20.0%
= (+$403.00/$20,708.67)*(365/20 days)
