Yesterday, with no time value remaining the October 21st, 2022 $130.00 Call options, the Covered Calls position was rolled-up-and-out to the October 28th, 2022 $137.00 strike price -- see yesterday's post here . The objective in this rollout transaction was to ensure that Abbvie's $1.41 per share ex-dividend today would be captured along with the potential to achieve a higher annualized-return-on-investment by closing the position before the October 28th expiration date. By owning the Abbvie shares at yesterday's close, I will receive the $1.41 per share dividend. But, with the strong upside move in Abbvie's stock today, I decided to go ahead and close out this Covered Calls position.
As detailed below, the return-on-investment result for this Abbvie Inc. position is +1.2% absolute return in 13 days (equivalent to a +33.8% annualized return-on-investment).
Abbvie Inc. (ABBV) -- Covered Calls Position Closed
The simultaneous buy/write transaction was as follows:
9/30/2022 Bought 200 shares of Abbvie Inc. stock @ $136.86 per share
9/30/2022 Sold 2 ABBV October 21st, 2022 $130.00 Call options @ $8.24 per share. The Implied Volatility of these Calls was 31.4 when this position was established.
10/12/2022 Rolled-Up-and-Out: Bought-to-Close the 10/21/2022 $130.00 Calls for $12.55 and simultaneously Sold-to-Open the 10/28/2022 $137.00 Calls at $6.75.
10/13/2022 Captured the Abbvie quarterly ex-dividend of $1.41 per share
10/13/2022 Closed out (i.e. unwound) this Abbvie Covered Calls position by Selling-to-Close 200 ABBV shares at $140.89 and simultaneously Buying-to-Close 2 10/28/2022 $137.00 Calls at $6.31 per share.
The overall performance results (including commissions) are as follows:
Covered Calls Net Investment: $25,725.34
= ($136.86 - $8.24) * 200 shares + $1.34 commission
(a) Options Income: -$778.02
= ($8.24 - $12.55 + $6.75 -$6.31) * 200 shares - $4.02 commission
(b) Dividend Income: +$282.00
= $1.41 per share x 200 shares
(c) Capital Appreciation (ABBV shares sold today at $140.89): +$806.00
= ($140.89 stock sales price - $136.86 stock purchase price) * 200 shares
Net Profit: +$309.98
= (-$778.02 options income +$282.00 dividend income + $806.00 capital appreciation)
Absolute Return-on-Investment: +1.2%
= +$309.98/$25,725.34
Equivalent Annualized Return-on-Investment (If assigned on the 10/21/2022 options expiration date): +33.8%
= (+$309.98/$25,725.34) * (365/13 days)
