Today is the February 18th options expiration date for Nucor. Fortunately, Nucor's stock price has continued its rise, so at 2:00pm this afternoon when the stock price was $123.245, I continued my position repair approach and rolled-up-and-out to the $124.00 strike price for two weeks more on March 4th. A vertical debit spread transaction was executed at a net debit of $.34 ($4.37 - $4.03) per share -- so $4.66 time value per share ($124.00 new strike price - $119.00 old strike price - $.34 net debit) was added to this Covered Calls position.
As detailed below, a potential return-on-investment result for this Nucor Corporation Covered Calls position is now -1.8% absolute
return in 58 days (equivalent to a -11.4% annualized
return-on-investment) if the stock price closes above the $124.00 strike price on the March 4th options expiration date.
Nucor Corporation (NUE) -- Continuation of Covered Calls Position
The original simultaneous buy/write transaction 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.
2/02/2022 Rolled-Up the NUE Covered Calls position by the following
debit spread transaction: Simultaneously Bought-to-Close the three Feb. 18th $97.50 Calls @ $13.20 per share and Sold-to-Open three Feb. 18th
$110.00 Calls @ $4.50 per share.
2/11/2022 Rolled-Up the NUE Covered Calls position by the following
debit spread transaction: Simultaneously Bought-to-Close the three Feb.
18th $110. Calls @ $10.08 per share and Sold-to-Open three Feb. 18th
$119.00 Calls @ $3.38 per share.
2/18/2022 Rolled-Up-and-Out the NUE Covered Calls position by the following
debit spread transaction: Simultaneously Bought-to-Close the three Feb.
18th $119.00 Calls @ $4.37 per share and Sold-to-Open three March 4th
$124.00 Calls @ $4.03 per share.
A possible overall performance result (including commissions) for this Nucor Corporation Covered Calls position is as follows:
Covered Calls Cost Basis: $34,019.01
= ($121.94 - $8.55) * 300 shares + $2.01 commissions
Net Profit Components:
(a) Options Income: -$1,402.05
= ($8.55 + $3.05 - $13.70 + $4.50 +3.38 - $10.08 -$4.37 +$4.03) * 300 shares - $10.05 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If Nucor shares assigned at $124.00 strike price at options expiration): -$618.00
+($124.00 - $121.94) * 300 shares
Total Net Profit (If Nucor shares assigned at the $124.00 strike price at the March 4th, 2022 expiration): -$784.05 = (-$1,402.05 options income + $0.00 dividend income - $618.00 capital appreciation)
Absolute Return-on-Investment (If Nucor shares assigned at $124.00 strike price on March 4th, 2022 expiration): -1.8% = -$618.00/$34,019.01
