As detailed below, the result achieved was a +2.2% absolute return-on-investment (equivalent to +45.2% annualized return-on-investment) for the 18 days holding period). This position was established using my Dividend Capture Strategy, so the return-on-investment result achieved includes receiving Discover's $.60 per share quarterly dividend since the ex-dividend date occurred on November 22nd which was during the 18 day period between November 15th when this Covered Calls position was established and the December 2nd, 2022 options expiration date.
Discover Financial Services (DFS) -- Covered Calls Position Assigned on the December 2nd Options Expiration Date
The buy/write transaction was as follows:
11/15/2022 Bought 200 shares of Discover Financial Services @ $104.18 per share
11/15/2022 Sold 2 DFS Dec. 2nd, 2022 $101.00 Call options @ $4.80 per share. The Implied Volatility of these Calls was 30.3 when this position was established.
11/22/2022 Ex-dividend of $.60 per share
12/2/2022 Two DFS $101.00 Calls expired in-the-money (DFS stock was
$105.40 at the market close yesterday (12/2/2022) and the 200 stock shares
were sold at the $101.00 strike price to close out this Covered Calls position.
The overall performance results (including commissions) was as follows:
Covered Calls Net Investment: $19,877.34
= ($104.18 - $4.80) * 200 shares + $1.34 commission
Net Profit Components:
(a) Options Income: +$958.66
= ($4.80 * 200 shares) - $1.34 commission
(b) Dividend Income: +$120.00
= ($.60 dividend per share x 200 shares)
(c) Capital Appreciation (DFS shares assigned at $101.00 strike price at options expiration): -$636.00
+($101.00 strike price - $104.18 original stock purchase price) * 200 shares
