1. Cleveland-Cliffs Inc. (CLF) -- Five hundred shares were slightly out-of-the-money at $22.98 at market close
yesterday since the strike price was $23.00. So, the five hundred
Cleveland-Cliffs shares now remain in the
Covered Calls Advisor
Portfolio. A decision will
be made early next week to either sell these shares or to
continue this Covered Calls position by selling future Call options
against
the shares currently held.
2. Micron Technology Inc. (MU) -- Five hundred shares were slightly out-of-the-money at $69.94 at market close yesterday since the strike price was $70.00. So, the five hundred Micron shares now remain in the Covered Calls Advisor Portfolio. A decision will be made early next week to either sell these shares or, more likely, to continue this Covered Calls position by selling future Call options against the shares currently held.
Whatever decision is made for these Cleveland-Cliffs and Micron Technology positions, the detailed transactions-to-date for these positions will be posted to this Covered Calls Advisor blog on the same day the transactions occur.
3. iShares Large-Cap China ETF (FXI) -- Continuation of Covered Calls Position
With only about 10 minutes remaining in yesterday's (Friday's) trading session, the Covered Calls position in iShares China Large-Cap ETF (ticker FXI) was continued by rolling the iShares China Large-Cap Covered Calls position up-and-out from the June 3rd, 2022 $31.00 Calls to the June 17th, 2022 $32.00 Calls.
When the FXI price was $31.89, a Call options spread was executed at the Covered Calls Advisor's net debit limit order price of $.14 per share. The six June 3rd $31.00 Calls were bought-to-close @ $.91 per share and six June 17th, 2022 $32.00 Calls were sold-to-open @ $.77 per share to continue this Covered Calls position. In doing this roll-up-and-out transaction, I am continuing the approach stated in my previous rollout transaction on May 20th, 2022 which was based on a conviction that Chinese stocks are in a bottoming process and that this position can be repaired from its current loss back close to breakeven or even back to profitability by a strategy of regularly rolling out existing Calls to the next bi-weekly options expiration date (June 17th in today's case) late in the trading day on the existing FXI Covered Calls position's options expiration date (June 3rd in this case).
As detailed below, the price of FXI has declined along with the over market since this position was first established on February 18th, 2022 but the position remains viable despite an economic slowdown in China including the Covid-19 lockdowns. I remain bullish on China stocks now for three primary reasons: (1) their stock valuations are very low versus their historic levels; (2) related to monetary policy, China is doing QE whereas the U.S. and Europe have now begun a QT policy mode--making China's stock markets attractive relatively speaking; and (3) China's recent Covid trends have improved significantly and they have begun easing their rigid lockdown policies.
Note: I prefer FXI to some other China-focused ETFs since FXI options are very liquid and iShares purchases all China holdings therein (such as Alibaba, Tencent, JD, etc.) only on the Hong Kong Exchange rather than on U.S. Exchanges. This policy avoids most of the current regulatory and political risks inherent in the U.S. listings of these Chinese companies.
The detailed transactions to-date are 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 600 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.
4/01/2022 6 FXI Calls expired out-of-the-money so the 600 shares remained in the Covered Calls Advisor Portfolio.
04/04/2022 Continued this iShares China Large-Cap ETF Covered Calls position by selling 6 FXI April 14th, 2022 $35.00 Call options @ $.38 per share.
4/14/2022 6 FXI Calls expired out-of-the-money so the 600 shares remained in the Covered Calls Advisor Portfolio.
05/20/2022 Continued this iShares China Large-Cap ETF Covered Calls position by selling 6 FXI June 3rd, 2022 $31.00 Call options @ $.77 per share. The FXI share price was $30.69 when these Calls were sold and the Implied Volatility of these Calls was 36.4.
6/03/2022 Continued the Covered Calls position in iShares Large-Cap China ETF by Rolling-Up-and-Out the current June 3rd FXI Covered Calls position by simultaneously buying-to-close the six June 3rd $31.00 Calls at $.91 per share and selling-to-open six June 17th, 2022 $32.00 Calls at $.77 per share. Note: the FXI price was $31.89 when this transaction was executed.
An overall performance result (including commissions) for this iShares China Large-Cap ETF Covered Calls position if the 6/17 $32.00 Calls are in-the-money and therefore assigned on the 6/17/2022 options expiration date would be as follows:
Stock Purchase Cost: $20,806.02
= ($36.69 - $2.02) * 600 shares + $4.02 commission
Net Profit:
(a) Options Income: +$2,049.90
= ($2.02 + $.42 + $.38 + $.77 - $.91 + $.77) * 600 shares - $20.10 commissions
(b) Dividend Income: +$0.00 Note: there will be an ex-distribution prior to the 6/17 options expiration date, but the amount of this distribution is unknown now, so the amount is not yet included in these roi calculations.
(c) Capital Appreciation (If 600 iShares China Large-Cap ETF shares assigned at $32.00 strike price at expiration): -$2,814.00
+($32.00 - $36.69) * 600 shares
Total Net Profit (If 600 iShares China Large-Cap ETF shares assigned at $32.00 strike price at the 6/17/2022 options expiration): -$764.10
= (+$2,049.90 options income +$0.00 dividend income -$2,814.00 capital appreciation)
Absolute Return-on-Investment: -3.7%
= -$764.10/$20,806.02
Annualized Return-on-Investment: -11.2%
= (-$764.10/$20,806.02) * (365/120 days)
------------------------------------------
The six current positions in the Covered Calls Advisor Portfolio are shown in the right sidebar on the homepage of my blog here: http://coveredcallsadvisor.blogspot.com/
This blog is intended for all who are interested in and want to learn more about the Covered Calls investing strategy. I reply to all emails and encourage you to email me at any time at the address shown below with any questions/etc. related to Covered Calls (or their equivalent Cash-Secured Puts).
Best Wishes and Godspeed,
Jeff Partlow
The Covered Calls Advisor
partlow@cox.net
