As detailed below, the return-on-investment results for this Bank of America position is: +3.5% absolute return in 23 days (equivalent to a +56.2% annualized return-on-investment).
Bank of America Corp. (BAC) -- Covered Calls Position Closed Out
The buy/write transaction was as follows:
11/29/2021 Bought 500 shares of Bank of America Corp. stock @ $45.50 per share
11/29/2021 Sold 5 BAC Dec. 17th, 2021 $44.00 Call options @ $2.04 per share
Note: The Open Interest in these Calls was 16,908 contracts and their Implied Volatility was 28.3
12/02/2021 Ex-dividend of $.21 per share
12/17/2021 5 BAC $44.00 strike price Calls expired slightly out-of-the-money with the stock closing at $43.88, so 500 BAC shares remained in the Covered Calls Advisor Portfolio.
12/23/2021 Closed out the Bank of America position by selling 500 BAC shares @ $44.79 per share.
The overall performance results (including commissions) was as follows:
Covered Calls Cost Basis: $21,733.35
= ($45.50 - $2.04) * 500 shares + $3.35 commission
Net Profit Components:
(a) Options Income: +$1,020.00
= ($2.04 * 500 shares)
(b) Dividend Income: +$105.00
= $.21 per share x 500 shares
(c) Capital Appreciation (500 BAC shares sold at $44.79): -$355.00
= ($44.79 -$45.50) * 500 shares
Net Profit: +$770.00
= (+$1,020.00 options income +$105.00 dividend income - $355.00 capital appreciation)
Absolute Return-on-Investment: +3.5%
= +$770.00/$21,733.35
Equivalent Annualized Return-on-Investment: +56.2%
= (+$770.00/$21,733.35)*(365/23 days)
