December 31st, 2021 Options Expiration Results

The Covered Calls Advisor Portfolio had three Covered Calls positions (Devon Energy Corp., Energy Select Sector SPDR Fund ETF, and Meta Platforms Inc.) with December 31st, 2021 options expirations.  All three positions closed in-the-money with the following results:

• Devon Energy Corp. (DVN) -- +6.2% absolute return (equivalent to +51.1% annualized return-on-investment) for the 44 days of this investment
• Energy Select Sector SPDR Fund ETF (XLE) -- +2.1% absolute return (equivalent to +50.9% annualized roi) for the 15 days of this investment
• Meta Platforms Inc. (FB) -- +1.2% absolute return (equivalent to +26.3% annualized roi) for the 17 days of this investment

The cash now available from the assignment (i.e. closing) of these in-the-money positions will be retained until new Covered Calls and/or 100% Cash-Secured Puts positions are established.  Given the Covered Calls Advisor's currently cautious Overall Market outlook, new positions will be hedged by continuing to establish Covered Calls at moderately in-the-money strike prices with good downside protection. 

The detailed transactions and results for these three closed positions are as follows:

 

1.   Devon Energy Corp. (DVN) -- Covered Calls Position Assigned at the Options Expiration Date

The buy/write transaction was as follows:
11/18/2021 Bought 300 Devon Energy shares @ $42.08
11/18/2021 Sold 3 Devon 12/17/2021 $39.00 Call options @ $3.80   Note: the Implied Volatility of these Call options was 45.6 when this position was established and their Bid/Ask spread was $3.75/$3.90.
12/08/2021 Rolled-Up-and-Out: Bought-to-Close the 12/17 $39.00 Calls for $6.29 and simultaneously Sold-to-Open the 12/23 $43.00 Calls at $2.59.
12/09/2021 Quarterly ex-dividends totaling $.84 per share
12/23/2021 Bought-to-Close 3 DVN Dec. 23rd, 2021 $43.00 Call Options @ $.01 per share and simultaneously Sold-to-Open 3 DVN Dec. 31st, 2021 $43.00 Calls @ $.71 per share.
12/31/2021 Covered Calls position closed out -- 3 DVN Call options expired in-the-money, so 300 shares were sold at the $43.00 strike price. Note: the stock price was in-the-money at $44.05 per share at options expiration.

The overall performance results (including commissions) for this Devon Energy Covered Calls position was as follows:
Covered Calls Cost Basis: $11,486.01
= ($42.08 - $3.80) * 300 shares + $2.01 commissions

Net Profit Components:
(a) Options Income: +$179.70
= ($3.80 - $6.29 + $2.59 -$.01 +$.71) * 300 shares - $6.03 commissions
(b) Dividend Income: +$252.00
= ($.84 total in dividends per share x 300 shares)
(c) Capital Appreciation (Devon shares were in-the-money and therefore assigned at the $43.00 strike price in the 12/31/2021 options expiration): +$276.00
+($43.00 - $42.08) * 300 shares

Total Net Profit: +$707.70
= (+$179.70 Call options income +$252.00 dividend income +$276.00 capital appreciation)

Absolute Return-on-Investment: +6.2%
= +$707.70/$11,486.01
Equivalent Annualized Return-on-Investment: +51.1%
= (+$707.70/$11,486.01)*(365/44 days)

2.  Energy Select Sector SPDR Fund ETF (XLE) -- Covered Calls Assigned on the Options Expiration Date
The buy/write transaction was as follows:
12/17/2021 Bought 300 shares of the Energy Select Sector SPDR Fund @ $54.81 per share 
9/17/2021 Sold 3 XLE Dec. 31st, 2021 $53.50 Call options @ $1.72 per share
Note: the Implied Volatility of these Call options was 21.8 when this position was established.
12/20/2021 Ex-distribution of $.695 per share
12/31/2021 Covered Calls position closed out -- 3 XLE Call options expired in-the-money, so 300 shares were sold at the $53.50 strike price. Note: the stock price was in-the-money at $55.50 per share at options expiration.

The overall performance result (including commissions) was as follows:
Covered Calls Cost Basis: $15,929.01 = ($54.81 - $1.72) * 300 shares + $2.01 commission

Net Profit Components:
(a) Options Income: +$518.01
= ($1.72 * 300 shares) - $2.01 commissions
(b) Dividend Income: +$208.50
= ($.695 dividend per share x 300 shares)
(c) Capital Appreciation (XLE shares assigned at $53.50 strike price at options expiration): -$393.00
= +($53.50 - $54.81) * 300 shares

Total Net Profit: +$333.51

= (+$518.01 options income + $208.50 dividend income - $393.00 capital appreciation)
 

Absolute Return-on-Investment: +2.1%

= +$333.51 net income divided by $15,929.01 original investment cost basis

Annualized Return-on-Investment: +50.9%

= (+$333.51/$15,929.01) *(365/15 days)

3.  Meta Platforms Inc. (FB) -- Covered Call Position Assigned on the Options Expiration Date

The Covered Calls Advisor's buy/write limit order was transacted as follows:
12/15/2021 Bought 100 Facebook shares @ $327.95
12/15/2021 Sold 1 Facebook 12/31/2021 $310.00 Call option @ $21.71.
12/31/2021 Covered Call position closed out -- 1 FB Call option expired in-the-money, so 100 shares were sold at the $310.00 strike price. Note: the stock price was in-the-money at $336.35 per share at options expiration.

The overall performance result (including commissions) for this Meta Platforms Covered Call position was as follows:
Covered Call Cost Basis: $30,624.67
= ($327.95 - $21.71) * 100 shares + $.67 commission

Net Profit Components:
(a) Option Income: +$2,170.33
= ($21.71 * 100 shares) - $.67 commission
(b) Dividend Income: +$0.00

(c) Capital Appreciation (FB shares assigned at $310.00 strike price at options expiration): -$1,795.00
+($310.00 - $327.95) * 100 shares

Total Net Profit: +$375.33

= (+$2,170.33 option income +$0.00 dividend income -$1,795.00 capital appreciation)

Absolute Return-on-Investment: +1.2%

= +$375.33/$30,624.67

Annualized Return-on-Investment: +26.3%

= (+$375.33/$30,624.67) * (365/17 days)

Best Wishes for a Happy, Healthy, and Prosperous New Year!

Jeff Partlow
The Covered Calls Advisor
partlow@cox.net