Early Assignment of Covered Calls Position in JPMorgan Chase & Co.

Early this morning, the Covered Calls Advisor was notified by Schwab that the two JPMorgan Chase & Co. October 21st, 2022 $100.00 Call options were exercised yesterday (the last business day prior to today's October 5th ex-dividend date).   JPMorgan Chase & Co. stock has increased from its purchase price of $108.93 to $112.77 at the market close yesterday.  The original Delta of 79.3 (which approximates the probability of assignment at options expiration) had increased to a very high 96.2 at yesterday's market close. When this Covered Calls position was established, the time value (aka extrinsic value) was $1.22 per share [$10.15 Call options premium - ($108.93 stock purchase price - $100.00 strike price)].  This original $1.22 time value had declined on yesterday's market close to $0.00 so, as expected, the owner of the Calls exercised their option to buy the 200 shares at the $100.00 strike price in order to receive today's $1.00 per share dividend.  

Although I will not receive the $1.00 per share dividend, I preferred the Early Assignment for two reasons: (1) As detailed below, the early assignment for this JPMorgan Chase & Co.  position provided a higher annualized-return-on-investment result for the Covered Calls Advisor Portfolio of +1.2% absolute return-on-investment (equivalent to +37.4% annualized roi for the 12 days this position was held).  This result exceeded the maximum potential annualized-roi of +28.2% if the stock would instead be assigned on its October 21st, 2022 monthly options expiration date; and (2) Because of the stock price volatility that normally occurs immediately following the quarterly earnings report of any company, I strongly prefer not holding the stock of any company on that day; and in this case, JPMorgan's Q3 2022 earnings report on October 14th, 2022 is prior to the Oct. 21st options expiration date. 

JPMorgan Chase & Co. (JPM) -- Covered Calls Position Closed by Early Assignment

The simultaneous buy/write transaction was:
9/23/2022 Bought 200 JPM shares @ $108.93
9/23/2022 Sold 2 JPM October 21st, 2022 $100.00 Call options @ $10.15 per share
10/04/2022 JPM Call options owner exercised their option, so the Covered Calls position was closed out early.  The 2 JPM Call options expired worthless and my 200 JPM shares were sold at the $100.00 strike price.

The overall performance results (including commissions) for this JPM Covered Calls position were as follows:
Stock Purchase Net Investment: $19,757.34
= ($108.93 - $10.15) *200 shares + $1.34 commission

Net Profit Components:
(a) Options Income: +$2,028.66
= ($10.15 *200 shares) - $1.34 commission
(b) Dividend Income (JPM Call options exercised early on October 4th, the business day prior to the October 5th ex-div date): +$0.00

(c) Capital Appreciation (JPM shares assigned at $100.00 strike): -$1,786.00
+($100.00 -$108.93) * 200 shares

Total Net Profit: +$242.66

= (+$2,028.66 options income +$0.00 dividend income -$1,786.00 capital appreciation)

 

Absolute Return-on-Investment: +1.2%

= +$242.66/$19,757.34

Annualized Return-on-Investment: +37.4%

= (+$242.66/$19,757.34) * (365/12 days)