As detailed below, the return-on-investment result for this Morgan Stanley Covered Calls position was +1.1% absolute
return in 8 days (equivalent to a +49.9% annualized
return-on-investment). I am fine with not receiving Morgan Stanley's $.775 ex-dividend today since the +49.9% annualized-return-on-investment achieved by early assignment exceeds the +31.2% that would have been achieved if this position was instead assigned on its February 10th options expiration date.
Morgan Stanley (MS) -- Covered Calls Position Closed by Early Assignment
The simultaneous buy/write transaction was:
01/19/2023 Bought 200 Morgan Stanley shares @ $93.24
01/19/2023 Sold 2 Morgan Stanley 2/10/2023 $90.00 Call options @ $4.22
Note: the Implied Volatility of the Call options was 25.6 when this buy/write transaction was executed.
1/27/2023 Morgan Stanley Call options owner exercised their two Call
options, so the Covered Calls position was closed out early. The two
Morgan Stanley Call options expired worthless and the 200 Morgan Stanley shares were
sold at the $90.00 strike price.
The overall performance results (including commissions) for this Morgan Stanley Covered Calls position are as follows:
Covered Calls Net Investment: $17,805.34
= ($93.24 - $4.22) * 200 shares + $1.34 commission
Net Profit Components:
(a) Options Income: +$842.66
= ($4.22 * 200 shares) - $1.34 commission
(b) Dividend Income (Call options exercised early on Friday, January 27th, the last business day prior to the January 30th ex-div date): +$0.00
(c) Capital Appreciation (Morgan Stanley Call options assigned early on January 27th): -$648.00
+($90.00 strike price - $93.24 stock purchase price) * 200 shares
