As detailed below, the return-on-investment results for this CVS Health position was: +2.0% absolute return in 20 days (equivalent to a +37.0% annualized return-on-investment). This Covered Calls position demonstrates the benefit of selling moderately in-the-money Covered Calls in bearish markets using the Dividend Capture Strategy. This CVS stock price changed by -1.8% since its original purchase price about 3 weeks ago, however a satisfactory profit of +2.0% absolute return-on-investment (equivalent to a +37.0% annualized return-on-investment) in 20 days was achieved with this in-the-money CVS Covered Calls position.
CVS Health Corp. (CVS) -- Covered Calls Position Closed Out
The buy/write transaction was:
1/10/2023 Bought 200 CVS shares @ $89.83
1/10/2023 Sold 2 CVS 1/27/2023 $88.00 Call options @ $2.81
1/19/2023 Quarterly ex-dividend of $.605 per share
1/27/2023 Two CVS $88.00 Calls expired out-of-the-money at options expiration, so 200 CVS shares remain in the Covered Calls Advisor Portfolio.
1/30/2023 Closed out this CVS Covered Calls position by selling 200 CVS shares at $88.1845 per share.
The overall performance results (including commissions) for this CVS Health Covered Calls position are as follows:
CVS Covered Calls Net Investment: $17,405.34
= ($89.83 - $2.81) * 200 shares + $1.34 commission
Net Profit Components:
(a) Options Income: +$560.66
= ($2.81 * 200 shares) - $1.34 commission
(b) Dividend Income (CVS stock went ex-dividend on Jan. 19th, 2023 @ $.605 per share) = +$121.00
= ($.605 dividend per share x 200 shares)
(c) Capital Appreciation (200 CVS shares sold at $88.1845): -$329.10
+($88.1845 - $89.83) * 200 shares
