- Five Covered Calls positions expired in-the-money (stock price above the strike price) on their options expiration dates, so the options expired and the stocks were sold at their respective strike prices with the following results:
- Devon Energy Corp. (DVN) -- +6.2% absolute return in 44 days (equivalent to +51.1% annualized return-on-investment).
- Energy Select Sector SPDR Fund (XLE) -- +2.1% absolute return in 15 days (equivalent to +50.9% annualized return-on-investment).
- Meta Platforms Inc. (FB) position #1 -- +1.2% absolute return in 17 days (equivalent to +26.3% annualized return-on-investment).
- Meta Platforms Inc. (FB) position #2 -- +0.7% absolute return in 12 days (equivalent to +21.4% annualized return-on-investment).
- Nucor Corp. (NUE) -- +1.7% absolute return in 16 days (equivalent to +39.6% annualized return-on-investment).
- Three positions were closed out profitably prior to their options expiration dates based on decisions made by the Covered Calls Advisor to unwind these positions prior to their options expiration dates with the following results:
- Bank of America Corp. (BAC) Covered Calls -- +3.5% absolute return in 23 days (equivalent to +56.2% annualized return-on-investment).
- Buckle Inc. (BKE) Covered Calls -- +2.3% absolute return in 16 days (equivalent to +52.8% annualized return-on-investment).
- JPMorgan Chase & Co. (JPM) Covered Calls -- +1.3%
absolute return in 8 days (equivalent to +60.9% annualized
return-on-investment).
- One Covered Calls position was closed by early assignment on the day prior to the ex-dividend date with the following results:
- EOG Resources Inc. (EOG) -- +0.8% absolute return in 6 days (equivalent to +47.0% annualized return-on-investment).
- Two Covered Calls positions expired out-of-the-money on their options expiration dates. Five hundred shares of American Eagle Outfitters Inc. and and three hundred shares of Nucor Corporation now remain in the Covered Calls Advisor Portfolio (shown in the right sidebar of this blog). Decisions will be made soon to either sell these shares or to continue with their Covered Calls positions by selling future Call options against the shares currently held.
During the past year
(last 12 months) 125 of 132 positions (94.7%) in the Covered Calls Advisor Portfolio (CCAP) were closed out at a profit, which exceeded by a wide margin the Covered Calls Advisor's objective that at least two-thirds (66.7%) of positions be closed profitably. The
CCAP weighted average annualized return-on-investment was +32.4% during the past year and the average
holding period for these 132 closed positions was 22.5 days. In comparison, the benchmark S&P 500 index (SPY) returned +18.1% during the same prior one-year period. Note: This 14.3 percentage points (32.4% minus 18.1%) outperformance during the past year by the Covered Calls Advisor Portfolio exceeds that which can normally be expected using the Covered Calls investing strategy. As indicated in this post made earlier this year on this blog site (Link) -- by exploiting our Covered Calls investing "edges", we can expect to achieve (over a period of several years) an average annualized-return-on-investment above the S&P 500 benchmark index of approximately 3 to 5 percentage points annually.
My preference is to identify opportunities to utilize my Dividend Capture Strategy (with ex-dividend dates prior to the options expiration dates) for relatively low-growth dividend-paying companies within these lower-growth Sectors -- Consumer Staples, Energy, Financials, Industrials, Materials, Real Estate, and Utilities. Higher growth companies in Sectors with fewer dividend-paying companies includes the Communication Services, Consumer Discretionary, Healthcare, and Information Technology Sectors. There is a greater likelihood that Covered Calls or Cash-Secured Puts positions in these higher-growth Sectors will be established without utilizing the Dividend Capture Strategy (i.e. without ex-dividend dates prior to their options expiration dates).
My current sentiment regarding each of the 11 sectors is:
- Bullish -- Financials, Energy, and Information Technology (ex-negative earning Tech companies);
- Neutral -- Consumer Discretionary, Communication Services, Healthcare, and Materials; and
- Bearish -- Consumer Staples, Industrials, Real Estate, and Utilities
As shown in the
right sidebar, there are currently seven open positions in
the Covered Calls Advisor Portfolio. Given the 7.8% decline in the S&P 500 (SPY) so far in 2022, several of these positions are currently held at a net loss. Future transactions and
return-on-investment results for these positions plus the details of all future newly established positions will be posted on
this blog site on the same day the transactions occur. New positions will be focused on companies that have, at a minimum, the following characteristics: (1) good valuation metrics (for example, historically low price-to-free cash flow); (2) appear in one of the many Covered Calls Advisor's screeners; and (3) have estimated next year earnings-per-share above that of their actual prior year.
This Covered Calls Advisor blog is a free service available to anyone interested in becoming a more effective Covered Calls investor. As always, I
welcome your emails whenever you have any comments or
questions related to this post or anything related to Covered Calls
investing.
Best Wishes and Godspeed,
Jeff Partlow
Covered Calls Advisor
partlow@cox.net
