This early exercise (on the day prior to STT's ex-dividend date) of the State Street Corporation Call options was expected by the Covered Calls Advisor since these Call options had no remaining time value at yesterday's close--so the owners of the Call options elected to purchase the 200 shares at the $82.50 strike price and thus also capture today's $.5699 per share ex-dividend. Despite not capturing today's dividend, this is a desirable outcome for the Covered Calls Advisor since the resulting +60.5% annualized return-on-investment (aroi) achieved exceeds the +37.3% maximum potential aroi that might have been achieved on the April 14th options expiration date (if the stock remained above the $82.50 strike price on that expiration date).
The transactions and detailed results for this position are as follows:
State Street Corporation (STT) -- Covered Calls Position Closed by Early Assignment
The transactions were:
3/18/2022 Bought 200 State Street shares @ $86.70 per share.
3/18/2022 Sold 2 STT 4/14/2022 $82.50 Call options @ $5.94
Note: the Implied Volatility of these Call options was 33.0 when this position was established.
03/30/2022 Two State Street 4/14/2022 $82.50 Calls were exercised early (on the day prior to the 3/31/2022 ex-dividend date), so the Calls expired and the 200 State Street shares were sold at the $82.50 strike price.
The overall performance results (including commissions) for this
State Street Covered Calls position were as follows:
Covered Calls Cost Basis: $16,153.34
= ($86.70 - $5.94) * 200 shares + $1.34 commission
Net Profit Components:
(a) Options Income: +$1,188.00
= ($5.94 * 200 shares)
(b) Dividend Income (STT Call options exercised early on the business day prior to the ex-div date): +$0.00
(c) Capital Appreciation (State Street shares assigned early): -$840.00
+($82.50 strike price -$86.70 stock purchase cost) * 200 shares;
