This early exercise by the Citigroup Call owners was surprising to the Covered Calls Advisor since they decided to immediately forgo the remaining $.52 time value in the Call options [$1.89 midpoint value of the Call options' $1.84/$1.94 Bid/Ask price - ($70.37 current stock price - $69.00 strike price)], and 7 days remaining until the options expiration date, to buy the stock and therefore also capture today's $.51 ex-dividend.
This is a good outcome for the Covered Calls Advisor since the resulting +41.1% annualized return-on-investment (aroi) achieved is slightly better than the +35.0% maximum possible aroi that might have been achieved later at the options expiration date if the stock remained above the $69.00 strike price on next Friday's (Nov. 5th) expiration date. The cash received from this position will most likely be invested in another Dividend Capture Strategy position in the Finance sector.
The transactions and detailed results for this position are as follows:
Citigroup Inc. (C) -- Covered Calls Position Closed by Early Assignment
The transactions were:
10/21/2021 Bought 300 Citigroup shares @ $70.30
10/21/2021 Sold 3 Citigroup 11/05/2021 $69.00 Call options @ $1.84
Note: the Implied Volatility of these Call options was 19.4 when this position was established.
10/28/2021 3 Citigroup Calls exercised early, so these Call options were assigned and the Covered Calls position was closed by the selling of the 300 Citigroup shares at their $69.00 strike price.
The overall performance results (including commissions) for this
Citigroup Covered Calls position were as follows:
Covered Calls Cost Basis: $20,540.01
= ($70.30 - $1.84) *300 + $2.01 commission
Net Profit Components:
(a) Options Income: +$552.00
= ($1.84 *300 shares)
(b) Dividend Income (Call options exercised early on the business day prior to the ex-div date): +$0.00
(c) Capital Appreciation (Citigroup shares assigned early): -$390.00
+($69.00 strike price -$70.30 stock purchase cost) *300 shares
