Early this morning, the Covered Calls Advisor was notified by Schwab that the two MetLife Inc. February 18th, 2022 $60.00 Call options were exercised yesterday (the last business day prior to Monday's February 7th ex-dividend date). MetLife stock has increased from its purchase price of $63.73 to $68.99 at the market close yesterday. This increase was benefited by MetLife's quarterly earnings report last Tuesday since they exceeded analysts' earnings per share estimates by 49.7%.
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 MetLife position.
As detailed below, the early assignment for this MetLife Inc. position provided a return-on-investment result for the Covered Calls Advisor Portfolio of +1.6% absolute return-on-investment (equivalent to +46.1% annualized roi for the 13 days this position was held). This result exceeded the maximum potential annualized roi of +35.9% if the stock was instead assigned after two more weeks at its February 18th, 2022 options expiration date.
MetLife Inc. (MET) -- Covered Calls Position Closed by Early Assignment
The transactions were:
1/25/2022 Bought 200 MetLife shares @ $63.73
1/25/2022 Sold 2 MET 2/18/2022 $60.00 Call options @ $4.70
Note: the Implied Volatility of these Call options was 35.9 when this position was established.
2/04/2022 Early Assignment of MET 2/18/2022 $60.00 Call options, so the options expired and 200 shares of MetLife were sold at the $60.00 strike price.
The overall performance results (including commissions) for this MetLife Covered Calls position were as follows:
Covered Calls Cost Basis: $11,807.34
= ($63.73 - $4.70) * 200 shares + $1.34 commission
Net Profit Components:
(a) Options Income: +$940.00
= ($4.70 * 200 shares)
(b) Dividend Income: (Call options exercised early on the last business day prior to the ex-div date): +$0.00
(c) Capital Appreciation (MetLife shares assigned early): -$746.00
+($60.00 strike price - $63.73 stock purchase cost) * 200 shares
