Roll-Up-and-Out Abbvie Inc. Covered Calls

Abbvie Inc. (ticker symbol ABBV) goes ex-dividend tomorrow at $1.41 per share.  With the stock trading today at $142.50, the existing Covered Calls position at the October 21st, 2022 $130.00 strike price had $0.00 remaining time value.  Rather than have these Calls exercised later today and the stock assigned (i.e. sold) at the $130.00 strike price, I decided to roll-up-and-out one week to the October 27th, 2022 $137.00 strike price at a net debit of $5.80 per share. The transaction was: 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. 

This remains a conservative in-the-money Covered Calls position since the Delta for these new Calls when this rollout transaction was executed was 74.8 which closely approximates the probability of assignment at options expiration (i.e. 74.8% probability). The Q3 2022 quarterly earnings report for Abbvie is before market open on the new October 28th options expiration date, so because of the uncertainty and accompanying volatility immediately after earnings releases, it is likely that this Covered Calls position will be unwound (i.e. closed out) prior to the Oct. 28th expiration date.

As detailed below, a potential return-on-investment result for this Abbvie Inc. position is +3.1% absolute return in 29 days (equivalent to a +38.9% annualized return-on-investment) if the stock closes above the $137.00 strike price at the October 28th, 2022 options expiration.  This potential +38.9% exceeds the +29.9% annualized return that would have been achieved if the original Abbvie Covered Calls position had instead been assigned early later today (i.e. the day prior to tomorrow's ex-dividend date).

Abbvie Inc. (ABBV) -- New Covered Calls Position
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 Abbvie quarterly ex-dividend of $1.41 per share

A possible overall performance results (including commissions) would be as follows:
Covered Calls Net Investment: $25,725.34
= ($136.86 - $8.24) * 200 shares + $1.34 commission

Net Profit Components:
(a) Options Income: +$485.32
= ($8.24 - $12.55 + $6.75) * 200 shares - $2.68 commission
(b) Dividend Income (If Abbvie shares assigned at the October 28th, 2022 options expiration): +$282.00
= $1.41 per share x 200 shares
(c) Capital Appreciation (If ABBV shares assigned with stock above $137.00 strike price on the Oct. 28th, 2022 options expiration): +$28.00
= ($137.00 strike price - $136.86 stock purchase price) * 200 shares

Potential Net Profit (If ABBV price is above $137.00 strike price at October 28th options expiration): +$795.32
= (+$485.32 options income +$282.00 dividend income + $28.00 capital appreciation)

Absolute Return-on-Investment (If Abbvie price is above $137.00 strike price at the October 28th options expiration date): +3.1%
= +$795.32/$25,725.34
Equivalent Annualized Return-on-Investment (If assigned on the 10/21/2022 options expiration date): +38.9%
= (+$795.32/$25,725.34) * (365/29 days)