Closed Covered Calls Position in Signet Jewelers Ltd.

On October 12th, 2021, a Covered Calls position was established in Signet Jewelers Ltd. (SIG) with an November 19th, 2021 options expiration date.  Signet stock has been on a very strong uptrend since this position was established and with only $.05 time value remaining in the Call options this morning, I decided to close out the position and secure an annualized return-on-investment (aroi) of +59.6% rather than waiting 10 more days for a potential maximum aroi of +43.7% if the position were to instead be assigned on the Nov. 19th options expiration date.    

As detailed below, the return-on-investment results for this Signet Jewelers Ltd. Covered Calls position was +4.6% absolute return in 28 days (equivalent to a +59.6% annualized return-on-investment). 

Signet Jewelers Ltd. (SIG) -- Covered Calls Position Closed
The simultaneous buy/write transaction today was as follows:
10/12/2021 Bought 200 Signet Jewelers shares @ $80.12
10/12/2021 Sold 2 Signet 11/19/2021 $75.00 Call options @ $8.30
Note: the Implied Volatility of the Calls was 50.2 when this transaction was executed, well above the S&P 500 Volatility Index (VIX) of 19.5.
10/28/2021 Upcoming quarterly ex-dividend of $.18 per share
11/09/2021 Unwound the Signet Covered Calls position by simultaneously selling-to-close 200 SIG shares at $106.15 per share and buying-to-close 2 SIG Nov. 19th $75.00 Calls @ $31.26 per share.

The overall performance results (including commissions) for this Signet Covered Calls position were as follows:
Covered Calls Cost Basis: $14,365.34
= ($80.12 - $8.30) * 200 shares + $1.34 commissions

Net Profit Components:
(a) Options Income: -$4,584.68
= ($8.30 -$31.21) * 200 shares - $2.68 commissions
(b) Dividend Income (Signet went ex-dividend on Oct. 28th at $.18 per share): +$36.00
= ($.18 dividend per share x 200 shares)
(c) Capital Appreciation (Signet shares sold at $106.15 per share): +$5,206.00
+($106.15 - $80.12) * 200 shares

Total Net Profit: +$657.32

= (-$4,584.68 options income + $36.00 dividend income + $5,206.00)

Note: this Total Net Profit is 98% of the maximum potential profit of $670.66 that would be achieved if the original Covered Calls position would have been held for 10 more days and assigned at the Nov. 19th expiration date.  A new position will be established today or tomorrow with the proceeds from closing this position that will certainly have the potential to achieve more profit than the additional $13.34 = ($670.66 - $657.32) that might have been achieved by holding the original Signet Covered Calls position until its Nov. 19th options expiration date.
 

Absolute Return-on-Investment: +4.6%

= +$657.32/$14,365.34

Annualized Return-on-Investment: +59.6%

= (+$657.32/$14,365.34) *(365/28 days)