Early Assignment of Covered Calls Position in Toll Brothers Inc.

Four Toll Brothers Inc. July 15th, 2022 $40.00 Call options were exercised yesterday (the last business day prior to today's 7/7/2022 ex-dividend date). This early exercise was expected by the Covered Calls Advisor since these Call options had only $0.06 time value remaining at yesterday's market close.   The owners of the Call options elected to purchase the 400 shares at the $40.00 strike price and thus also capture today's $.20 per share ex-dividend.  So, I captured all the original $.34 per share [$5.33 Call options premium - ($44.99 stock purchase price - $40.00 strike price)] time value as profit.   

The return-on-investment results are: +0.8% absolute return-on-investment (equivalent to +34.1% annualized-return-on-investment) for the 9 days this position was held. 

The transactions and detailed results for this Toll Brothers Inc. Covered Calls position were as follows:

Toll Brothers Inc. (TOL) -- Covered Calls Position Closed by Early Assignment

The simultaneous buy/write transaction was:
6/28/2022 Bought 400 Toll Brothers shares @ $44.99
6/28/2022 Sold 4 TOL July 15th, 2022 $40.00 Call options @ $5.33 per share
7/07/2022 Owners of TOL Calls exercised their options and 400 TOL shares sold at the $40.00 strike price.

The overall performance results (including commissions) for this Toll Brothers Covered Calls position are as follows:
Stock Purchase Cost Basis: $15,866.68
= ($44.99 - $5.33) *400 shares + $2.68 commission

Net Profit:
(a) Options Income: +$2,129.32
= ($5.33 *400 shares) - $2.68 commission
(b) Dividend Income (Call options exercised early on July 6th, the business day prior to the July 7th ex-div date): +$0.00

(c) Capital Appreciation (TOL assigned early at $40.00 strike price): -$1,996.00
+($40.00 -$44.99) * 400 shares

 Total Net Profit: +$133.32

= (+$2,129.32 options income +$0.00 dividend income -$1,996.00 capital appreciation)

 

Absolute Return-on-Investment: +0.8%

= +$133.32/$15,866.68

Annualized Return-on-Investment: +34.1%

= (+$133.32/$15,866.68) * (365/9 days)