For any Covered Calls position where there is an ex-dividend date prior to the options expiration date, the Covered Calls Advisor usually prefers to have the stock called away (assigned) early, normally on the day prior to the ex-div date (as it was in this case). The reason early assignment is preferred is that the Covered Calls Advisor's Dividend Capture Strategy spreadsheet was designed to identify positions where the annualized return-on-investment (aroi) from early assignment is greater than what might be achieved if the stock was instead assigned at its options expiration date--which was the case for this Truist position.
As detailed below, the early assignment for this Truist Financial position provided a return-on-investment result for the Covered Calls Advisor Portfolio of +1.0% absolute return-on-investment (equivalent to +42.3% annualized roi for the 9 days this position was held). This result exceeded the maximum potential annualized roi of +37.6% if the stock would instead be assigned on its February 18th, 2022 options expiration date.
Truist Financial Corporation(TFC) -- New Covered Calls Position
The transactions were:
2/01/2022 Bought 300 Truist shares @ $62.45
2/01/2022 Sold 3 TFC 2/18/2022 $60.00 Call options @ $3.07
Note: the Implied Volatility of these Call options was 27.5 when this position was established.
2/09/2022 3 TFC Call options exercised, so 300 TFC shares sold at the $60.00 strike price.
The overall performance results (including commissions) for this
Truist Covered Calls position are as follows:
Covered Calls Cost Basis: $17,816.01
= ($62.45 - $3.07) * 300 shares + $2.01 commission
Net Profit Components:
(a) Options Income: +$921.00
= ($3.07 * 300 shares)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (TFC shares assigned early): -$735.00
+($60.00 strike price -$62.45 stock purchase cost) * 300 shares
