At last Friday's options expiration, the Covered Calls positions in Ally Financial Inc. (ticker ALLY) and Micron Technology Inc. (MU) closed out-of-the-money, so their Call options expired and the shares remained in the Covered Calls Advisor Portfolio. Soon after the market open this morning, Call options were sold against the shares owned in both companies to continue these Covered Call positions.
For Ally Financial, five June 17th, 2022 $40.00 Call options were sold at $1.70 per share when the stock price was $39.57. For Micron, five June 3rd, 2022 $70.00 Call options were sold at $2.48 per share when the stock price was $69.54. As preferred by the Covered Calls Advisor, the next quarterly earnings report for both companies will be after their options expiration dates.
Ally Financial Inc. (ALLY) -- Continuation of Covered Calls Position
The transactions were:
4/22/2022 Bought 500 Ally Financial shares @ $42.07
4/22/2022 Sold 5 ALLY 5/20/2022 $40.00 Call options @ $2.81
4/29/2022 Quarterly ex-dividend of $.30 per share
5/20/2022 Call options expired out-of-the-money. The stock price was $38.67 at options expiration last Friday.
05/23/2022 Sold 5 ALLY 6/17/2022 $40.00 Call options @ $1.70 when the stock price was $39.57.
Two possible overall performance results (including commissions) for this Covered Calls position is as follows:
Stock Purchase Cost: $19,633.35
= ($42.07 - $2.81) * 500 shares + $3.35 commission
Net Profit:
(a) Options Income: +$2,248.30
= ($2.81 + $1.70) * 500 shares - $6.70 commission
(b) Dividend Income: +$150.00 = $.30 per share x 500 shares
+($39.57 -$42.07) * 500 shares
+($40.00 -$42.07) * 500 shares
1. Total Net Profit (If ALLY share price unchanged at $39.57 at options expiration): +$1,148.30 = (+$2,248.30 options income +$150.00 dividend income -$1,250.00 capital appreciation)
Micron Technology Inc. (MU) -- Continuation of Covered Calls Position
The original transaction was as follows:
03/31/2022 Sold 5 Micron April 14th, 2022 $72.50 100% Cash-Secured Put options @ $.92 per share.
04/14/2022 5 Micron $72.50 Puts expired in-the-money (stock price below the strike price), so 500 shares were purchased at $72.50 in the Covered Calls Advisor Portfolio
04/18/2022 Continued Micron position by selling 5 May 6th, 2022 $73.00 Call options @ $2.28 per share against the 500 Micron shares owned to establish a Micron Covered Calls position. The Implied Volatility of these Calls was 43.4 and the Delta was 44.5 when these Calls were sold.
05/06/2022 Five Micron $73.00 Call options expired out-of-the-money, so 500 MU shares remain in the Covered Calls Advisor Portfolio.
05/09/2022 Continued Micron position by selling 5 May 20th, 2022 $72.50 Call options @ $2.02 per share against the 500 Micron shares owned.
5/20/2022 Five Micron Call options expired out-of-the-money. The stock price was $68.90 at options expiration last Friday.
05/23/2022 Sold 5 Micron 6/03/2022 $70.00 Call options @ $2.48 when the stock price was $69.54.
Two possible overall performance result (including commissions) would be as follows:
100% Cash-Secured Puts Cost Basis: $36,246.65
= ($72.50 - $.92) * 500 shares + $3.35 commission
Net Profit:
(a) Options Income: +$3,836.60
= ($.92 + $2.28 + $2.02 + $2.48) * 500 shares - $13.40 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If Micron stock price is unchanged at $69.54 at the June 3rd, 2022 options expiration date): -$1,480.00
= ($69.54 - $72.50 original Put strike price) * 500 shares; OR
(c) Capital Appreciation (If Micron stock is above the $70.00 strike price at the June 3rd, 2022 options expiration): -$1,250.00
= ($70.00 June 3rd, 2022 strike price - $72.50 original strike price) * 500 shares
1. Total Net Profit (If Micron stock price is unchanged at $69.54 at options expiration): +$2,356.60
= (+$3,836.60 options income +$0.00 dividend income -$1,480.00 capital appreciation); OR
2. Total Net Profit (If Micron stock price is above the $70.00 strike price at options expiration): +$2,586.60
= (+$3,836.60 options income +$0.00 dividend income -$1,250.00 capital appreciation)
1. Absolute Return-on-Investment (If Micron stock is unchanged at $69.54 at the options expiration date of June 3rd, 2022) : +6.5%
= +$2,356.60/$36,246.65
Annualized Return-on-Investment: +36.5%
= (+$2,356.60/$36,246.65) * (365/65 days); OR
2. Absolute Return-on-Investment (If Micron stock is above $70.00 strike
price at the June 3rd, 2022 options expiration date) : +7.1%
= +$2,586.60/$36,246.65
Annualized Return-on-Investment: +40.1%
= (+$2,586.60/$36,246.65)*(365/65 days)
