This early exercise (on the day prior to EOG's ex-dividend date) of the two Call options was expected by the Covered Calls Advisor since these Call options were deep-in-the-money and had no remaining time value at Tuesday's market close. The time value had declined from $1.92 when the Covered Calls position was established to $0.00 on at market close on the day prior to the ex-dividend date. So, the owners of the Call options elected to purchase the 200 shares at the $113.00 strike price and thus also capture the $.75 per share ex-dividend. Despite not capturing today's dividend, this is a desirable outcome for the Covered Calls Advisor since the resulting +39.3% annualized return-on-investment (aroi) achieved exceeds the +33.7% maximum potential aroi that might have been achieved on the April 22nd options expiration date (if the stock remains above the $113.00 strike price on that expiration date).
The transactions and detailed results for this position are as follows:
EOG Resources Inc. (DVN) -- New Covered Calls Position
The buy/write transaction today was as follows:
3/28/2022 Bought 200 EOG Resources Inc. shares @ $120.36
3/28/2022 Sold 2 EOG 4/22/2022 $113.00 Call options @ $9.28 per share.
4/12/2022 Two EOG 4/22/2022 $113.00 Call options exercised early, so Calls expired and the 200 shares of EOG were sold by the Covered Calls Advisor at the $113.00 strike price to close out the Covered Calls position.
The overall performance results (including commissions) for this EOG Resources Covered Calls position were as follows:
Covered Calls Cost Basis: $22,217.34
= ($120.36 - $9.28) * 200 shares + $1.34 commissions
Net Profit Components:
(a) Options Income: +$1,854.66
= ($9.28 * 200 shares) - $1.34 commissions
(b) Dividend Income (Call options exercised early on the business day prior to the April 13th ex-div date): +$0.00
(c) Capital Appreciation: -$1,472.00
+($113.00 - $120.36) * 200 shares ;
