Rollout American Eagle Outfitters Inc. and Nucor Corporation

This morning, the Covered Calls positions in American Eagle Outfitters Inc. (ticker AEO) and Nucor Corporation (NUE) weres continued by rolling out to the February 18th, 2022 options expiration date. Both stocks have declined dramatically from their original purchase price, but the Covered Calls Advisor's evaluation of these companies is unchanged, so these positions will be continued in an effort to reduce the level of the current losses. The details of both of these Covered Calls positions are provided below.

1. American Eagle Outfitters Inc. (AEO) -- Continuation of Covered Calls Position
The transaction today was as follows:
11/24/2021 Bought 500 American Eagle Outfitters Inc. shares @ $27.43
11/24/2021 Sold 5 AEO 12/17/2021 $26.00 Call options @ $2.11
12/09/2021 Quarterly ex-dividend of $.18 per share
12/17/2021 5 Call options expired out-of-the-money and 500 shares of AEO retained in the Covered Calls Advisor Portfolio.
12/23/2021 Sold 5 AEO 12/31/2021 $24.00 Call options @ $.22 per share when the stock price was $23.23 per share.
12/30/2021 Rolled-Up-and-Out: Bought-to-Close the 12/31/2021 $24.00 Calls for $1.92 and simultaneously Sold-to-Open the 1/7/2022 $26.00 Calls at $.77.  The AEO stock price was $25.90 when this debit spread transaction was executed.
1/07/2021 Rolled-Down-and-Out: Bought-to-Close the 1/07/2022 $26.00 Calls for $.01 and simultaneously Sold-to-Open the 1/14/2022 $25.00 Calls at $.44.  The AEO stock price was $23.99 when this credit spread transaction was executed.
1/14/2022 5 AEO Calls expired out-of-the-money so the 500 shares remain in the Covered Calls Advisor Portfolio.
1/24/2022 Continued the American Eagle Covered Calls position by rolling it out to the February 18th, 2022 $23.00 strike by selling 5 AEO Calls at $.70 per share.

Two possible overall performance results (including commissions) for this American Eagle Outfitters Inc. Covered Calls position are as follows:
Covered Calls Cost Basis: $12,663.35
= ($27.43 - $2.11) * 500 shares + $3.35 commissions

Net Profit Components:
(a) Options Income: +$1,141.60
= ($2.11 + $.22 - $1.92 +$.77 - $.01 +$.44 + $.70) * 500 shares - $10.05 commissions
(b) Dividend Income: +$90.00
= $.18 per share x 500 shares
(c) Capital Appreciation (If American Eagle share price unchanged at $21.34 at the Feb. 18th, 2022 expiration): -$3,045.00
= +($21.34 - $27.43) * 500 shares ;or
(c) Capital Appreciation (If AEO shares assigned at $23.00 strike price at the 2/18/2022 options expiration): -$2,215.00
= +($23.00 - $27.43) * 500 shares

1. Total Net Profit (If American Eagle share price unchanged at $21.34 at the Feb. 18th, 2022 expiration): -$1,813.40

= (+$1,141.60 options income +$90.00 dividend income - $3,045.00 capital appreciation); or

2. Total Net Profit (If AEO shares assigned at $23.00 strike price at the Feb. 18th, 2022 expiration): -$983.40

= (+$1,141.60 + $90.00 - $2,215.00)

1. Absolute Return-on-Investment (If American Eagle share price unchanged at $21.34 at the Feb. 18th, 2022 expiration): -14.3%

= -$1,813.40/$12,663.35

Annualized Return-on-Investment: -60.8%

= (-$1,813.40/$12,663.35) * (365/86 days); or

2. Absolute Return-on-Investment (If AEO shares assigned at $23.00 strike price at the February 18th, 2022 options expiration date): -7.8%

= -$983.40/$12,663.35

Annualized Return-on-Investment (If AEO stock assigned at $23.00 at the Feb. 18th, 2022 expiration): -33.0%

= (-$983.40/$12,663.35) *(365/86 days)

2. Nucor Corporation (NUE) -- Continuation of Covered Calls Position
The simultaneous buy/write transaction today was as follows:
1/5/2022 Bought 300 Nucor shares @ $121.94
1/5/2022 Sold 3 Nucor 1/21/2022 $115.00 Call options @ $8.55
Note: the Implied Volatility of the Calls was 37.5 when this transaction was executed, well above the S&P 500 Volatility Index (VIX) of 16.7.
1/21/2022 Three Nucor Call options expired out-of-the-money and 300 shares of Nucor retained in the Covered Calls Advisor Portfolio.
1/24/2022 Continued the Nucor Covered Calls position by rolling it out to the February 18th, 2022 $97.50 strike by selling 3 NUE Calls at $3.05 per share.  

Two possible overall performance results (including commissions) for this Nucor Covered Calls position are as follows:
Covered Calls Cost Basis: $34,019.01
= ($121.94 - $8.55) * 300 shares + $2.01 commissions

Net Profit Components:
(a) Options Income: +$3,475.98
= ($8.55 + $3.05) * 300 shares - $4.02 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If Nucor share price unchanged at $89.67 at the Feb. 18th, 2022 expiration): -$9,681.00
= +($89.67 - $121.94) * 300 shares ;or
(c) Capital Appreciation (If Nucor shares assigned at $97.50 strike price at options expiration): -$7,332.00
+($97.50 - $121.94) * 300 shares

1. Total Net Profit (If Nucor share price unchanged at $89.67 at the Feb. 18th, 2022 expiration): -$6,205.02

= (+$3,475.98 + $0.00 - $9,681.00); or

2. Total Net Profit (If Nucor shares assigned at the $97.50 strike price at the Feb. 18th, 2022 expiration): -$3,856.02 = (+$3,475.98 + $0.00 - $7,332.00)
 

1. Absolute Return-on-Investment (If Nucor share price unchanged at $89.67 on the Feb. 18th, 2022 expiration): -18.2%

= -$6,205.02/$34,019.01

Annualized Return-on-Investment (If Nucor stock price unchanged at $89.67 at Feb. 18th, 2022 expiration): -151.3%

= (-$6,205.02/$34,019.01) *(365/44 days); or

 

2. Absolute Return-on-Investment (If Nucor shares assigned at $97.50 strike price on Feb. 18th, 2022 expiration): -11.3%

= -$3,856.02/$34,019.01

Annualized Return-on-Investment (If Nucor stock assigned at $97.50 at Feb. 18th, 2022 expiration): -94.0%

= (-$3,856.02/$34,019.01) *(365/44 days)