Continuation of Covered Calls Repair Strategy for Three Positions

The Covered Calls Advisor Portfolio's positions in American Eagle Outfitters Inc., iShares China Large-Cap ETF, and Lennar Corporation have declined since they were originally established and are currently held at a net loss. I remain bullish on all three of these equities, so today I continued these positions by selling out-of-the-money Calls against the shares held. The detailed transactions and some potential results to-date are as follows:

1. American Eagle Outfitters Inc. (AEO) -- Continuation of Covered Calls Position

The original transaction 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.
2/18/2022 5 AEO Calls expired out-of-the-money so the 500 shares remained in the Covered Calls Advisor Portfolio.
2/22/2022 Continued this American Eagle Covered Calls position by selling 5 March 18th, 2022 $23.00 Call options @ $.82 per share.
3/18/2022 5 AEO Calls expired out-of-the-money so the 500 shares remained in the Covered Calls Advisor Portfolio.
3/22/2022 Continued this American Eagle Covered Calls position by selling 5 April 14th, 2022 $20.00 Call options @ $.38 per share.  The American Eagle shares were $18.66 when these Calls were sold.

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: +$1,734.90
= ($2.11 + $.22 - $1.92 +$.77 - $.01 +$.44 + $.70 +$.82 + $.38) * 500 shares - $16.75 commissions
(b) Dividend Income: +$90.00
= $.18 per share x 500 shares
(c) Capital Appreciation (If American Eagle share price unchanged at $18.66 at the April 14th, 2022 expiration): -$4,385.00
= +($18.66 - $27.43) * 500 shares ;or
(c) Capital Appreciation (If AEO shares assigned at $20.00 strike price at the 4/14/2022 options expiration): -$3,715.00
= +($20.00 - $27.43) * 500 shares

1. Total Net Profit (If American Eagle share price unchanged at $18.66 at the April 14th, 2022 expiration): -$2,560.10

= (+$1,734.90 options income +$90.00 dividend income - $4,385.00 capital appreciation); or

2. Total Net Profit (If AEO shares assigned at $20.00 strike price at the April 14th, 2022 expiration): -$1,971.10

= (+$1,734.90 + $90.00 - $3,715.00)

1. Absolute Return-on-Investment (If American Eagle share price unchanged at $18.66 at the March 18th, 2022 expiration): -20.2%

= -$2,560.10/$12,663.35

Annualized Return-on-Investment: -52.3%

= (-$2,560.10/$12,663.35) * (365/141 days); or

2. Absolute Return-on-Investment (If AEO shares assigned at $20.00 strike price at the April 14th, 2022 options expiration date): -15.6%

= -$1,971.10/$12,663.35

Annualized Return-on-Investment (If AEO stock assigned at $20.00 at the April 14th, 2022 expiration): -40.3%

= (-$1,971.10/$12,663.35) *(365/141 days)

2. iShares China Large-Cap ETF (FXI) -- Continuation of Covered Calls Position

The original Buy/Write transaction was as follows:
2/18/2022 Bought 600 shares of iShares China Large-Cap ETF shares @ $36.69 per share 
2/18/2022 Sold 6 FXI March 4th, 2022 $35.00 Call options @ $2.02 per share.
3/04/2022 6 FXI Calls expired out-of-the-money so the 500 shares remained in the Covered Calls Advisor Portfolio.
3/22/2022 Continued this iShares China Large-Cap ETF Covered Calls position by selling 6 FXI April 1st, 2022 $35.00 Call options @ $.42 per share.  The FXI share price was $33.415 when these Calls were sold.

Two possible overall performance results (including commissions) for this iShares China Large-Cap ETF Covered Calls position are as follows:
Stock Purchase Cost: $20,806.02
= ($36.69 - $2.02) * 600 shares + $4.02 commission

Net Profit:
(a) Options Income: +$1,455.96
= ($2.02 + $.42) * 600 shares - $8.04 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If 600 iShares China Large-Cap ETF shares price unchanged at $33.415 at the 4/01/2022 options expiration): -$1,965.00
+($33.415 - $36.69) * 600 shares; OR
(c) Capital Appreciation (If 600 iShares China Large-Cap ETF shares assigned at $35.00 strike price at expiration): -$1,014.00
+($35.00 - $36.69) * 600 shares

1. Total Net Profit (If 600 iShares China Large-Cap ETF shares price unchanged at $33.415 at the April 1st, 2022 options expiration): -$509.04
= (+$1,455.96 options income +$0.00 dividend income -$1,965.00 capital appreciation); OR
2. Total Net Profit (If 600 iShares China Large-Cap ETF shares assigned at $35.00 strike price at expiration): +$441.96
= (+$1,455.96 options income +$0.00 dividend income -$1,014.00 capital appreciation)

1. Absolute Return-on-Investment (If 600 iShares China Large-Cap ETF shares price unchanged at $33.415 at the April 1st, 2022 options expiration): -2.4%
= -$509.04/$20,806.02
Annualized Return-on-Investment: -20.8%
= (-$509.04/$20,806.02) * (365/43 days); OR
2. Absolute Return-on-Investment: (If 600 iShares China Large-Cap ETF shares assigned at $35.00 strike price at expiration) +2.1%
= +$441.96/$20,806.02
Annualized Return-on-Investment: +18.0%
= (+$441.96/$20,806.02) * (365/43 days)

 

3. Lennar Corp. (LEN) -- Continuation of Covered Calls Position
The original simultaneous buy/write transaction was:
1/13/2022 Bought 200 Lennar Corp. shares @ $107.76
1/13/2022 Sold 2 LEN 2/04/2022 $103.00 Call options @ $6.18
Note: the Implied Volatility of the Call options was 29.3 when this position was transacted and the Delta (approximately the probability of assignment at expiration) was 72.2.
1/26/2022 Upcoming quarterly ex-dividend of $.375 per share
2/4/2022 Two Call options expired out-of-the-money and 200 shares of Lennar stock retained in the Covered Calls Advisor Portfolio.
2/07/2022 Rolled-Down-and-Out by selling two 2/11/2022 $93.50 Calls at $1.90.
2/11/2022 Two LEN $93.50 closed out-of-the-money at $91.54, so the options expired and two hundred Lennar shares remain in the Covered Calls Advisor Portfolio.
02/14/2022 Continued this Lennar Covered Calls position by selling 2 3/18/3033 Calls @ $3.71 per share at the $95.00 strike price when the stock was selling at $91.96.
3/18/2022 Two LEN Calls expired out-of-the-money so the 200 shares remained in the Covered Calls Advisor Portfolio.
3/22/2022 Continued this Lennar Corporation Covered Calls position by selling 2 April 14th, 2022 $92.00 Call options @ $2.20 per share.  The Lennar shares were $89.30 when these Call options were sold.

Two possible overall performance results (including commissions) for this Lennar Corp. Covered Calls position are as follows:
Covered Calls Cost Basis: $20,317.34
= ($107.76 - $6.18) * 200 shares + $1.34 commissions

Net Profit Components:
(a) Options Income: +$2,793.98
= ($6.18 + $1.90 + $3.71 + $2.20) * 200 shares - $4.02 commissions
(b) Dividend Income: +$75.00
= $.375 per share x 200 shares
(c) Capital Appreciation (If Lennar share price unchanged at $89.30 at the April 14th, 2022 expiration): -$3,692.00
= +($89.30 - $107.76) * 200 shares ;or
(c) Capital Appreciation (If LEN shares assigned at $92.00 strike price at the 4/14/2022 options expiration): -$3,146.00
= +($92.00 - $107.73) * 200 shares

1. Total Net Profit (If Lennar Corp. share price unchanged at $89.30 at the April 14th, 2022 expiration): -$823.02

= (+$2,793.98 options income +$75.00 dividend income - $3,692.00 capital appreciation); or

2. Total Net Profit (If Lennar shares assigned at $92.00 strike price at the April 14th, 2022 expiration): -$277.02

= (+$2,793.98 + $75.00 - $3,146.00)

1. Absolute Return-on-Investment (If Lennar share price unchanged at $89.30 at the April 14th, 2022 expiration): -4.1%

= -$823.02/$20,317.34

Annualized Return-on-Investment: -16.2%

= (-$823.02/$20,317.34) * (365/91 days); or

2. Absolute Return-on-Investment (If Lennar shares assigned at $92.00 strike price at the April 14th, 2022 options expiration date): -1.4%

= -$277.02/$20,317.34

Annualized Return-on-Investment (If LEN stock assigned at $92.00 at 4/14/2022 expiration): -5.5%

= (-$277.02/$20,317.34) *(365/91 days)