There are still 15 days remaining until the November 19th, 2021 options expiration date, but this Covered Call position was closed today since: (1) the stock has increased from its original $325.92 purchase price on October 25th to $335.86; and (2) the Implied Volatility of the Nov. 19th $320.00 Call option has declined from 39.4 when the position was established to 31.4 today when this position was closed. Importantly, the original $11.03 time value per share = [$16.95 Call option premium - ($325.92 stock purchase price - $320.00 Call option strike price)] had declined to only $3.04 today [$18.90 Call option premium - ($335.86 sales price of stock - $320.00 strike price of Call option)] when the position was closed. So, 72.4% of the potential maximum profit per share was achieved in only 10 days.
As detailed below, the absolute return-on-investment achieved was +2.6% (equivalent to an annualized roi of +94.2% for the 10-day holding period). For comparison, if the Covered Calls position had instead been held until the November 19th, 2021 expiration date and the stock remained above the $320.00 strike price, then the absolute roi would have been +3.6% and the annualized roi would have been +50.1% over the 26 days the position would have been held.
Facebook Inc. (FB) -- Covered Call Position Closed
The buy/write transaction was:
10/25/2021 Bought 100 Facebook shares @ $325.92
10/25/2021 Sold 1 Facebook 11/19/2021 $320.00 Call option @ $16.95.
11/04/2021 Closed the FB Covered Call position by unwinding the position at a limit order net credit of $316.96 per share which was executed as follows: Sold-to-Close 100 FB shares @ $335.86 per share and simultaneously Bought-to-Close 1 FB Nov. 19th $320.00 Call option at $18.90 per share.
The overall performance result (including commissions) for this Facebook Inc. Covered Call position was as follows:
Covered Call Cost Basis: $30,897.67
= ($325.92 - $16.95) * 100 shares + $.67 commission
Net Profit Components:
(a) Option Income: -$196.34
= ($16.95 - $18.90) * 100 shares - $1.34 commission
(b) Dividend Income: +$0.00
