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

Early this morning, the Covered Calls Advisor was notified by my broker (Schwab) that the two JPMorgan Chase & Co. (ticker JPM) January 13th, 2023 $127.00 Call options were exercised yesterday.  JPMorgan stock has increased from its purchase price of $132.59 one week ago to $136.38 at the market close yesterday.  The original $1.00 time value had declined on yesterday's market close to $0.00, so as I expected (and with 8 days remaining until the options expiration date), the owner of the Calls exercised their option to buy the 200 JPM shares at the $127.00 strike price in order to receive today's $1.00 per share ex-dividend.  

The post showing the details of this position when it was originally established is here.  As detailed below, the return-on-investment results for this JPMorgan Chase & Co. Covered Calls position was: +0.8% absolute return in 7 days (equivalent to a +41.1% annualized return-on-investment).   There are two reasons I am pleased to forgo JPM's $1.00 ex-dividend today: (1) The +41.1% annualized-return-on-investment is greater than the +36.1% that would have been achieved if this position was instead assigned in 8 days on its January 13th options expiration date; and (2) JPMorgan's next quarterly earnings report is before market open on January 13th (the options expiration date) and I prefer avoiding owning positions on earnings reporting days (because of the normal stock price volatility on those days).    

 

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

The simultaneous buy/write transaction was:
12/29/2022 Bought 200 JPM shares @ $132.59 12/29/2022 Sold 2 JPM January 13th, 2023 $127.00 Call options @ $6.59 per share
1/5/2023 JPMorgan Chase Call options owner exercised their two Call options, so the Covered Calls position was closed out early. The two JPM Call options expired worthless and the 200 JPMorgan shares were sold at the $127.00 strike price.

The overall performance results (including commissions) for this JPMorgan Chase & Co. Covered Calls position are as follows:
JPM Buy/Write Purchase Net Investment: $25,201.34
= ($132.59 - $6.59) *200 shares + $1.34 commission

Net Profit:
(a) Options Income: +$1,316.66
= ($6.59 * 200 shares) - $1.34 commission
(b) Dividend Income (Two JPM Call options exercised early on January 4th, the business day prior to the January 5th ex-div date): +$0.00
(c) Capital Appreciation (JPM assigned early): -$1,118.00
+($127.00 -$132.59) * 200 shares

Total Net Profit [Call options exercised on the last business day prior to the Jan. 5th ex-dividend date)]: +$198.66

= (+$1,316.66 options income +$0.00 dividend income -$1,118.00 capital appreciation)

 

Absolute Return-on-Investment: +0.8%

= +$198.66/$25,201.34

Annualized Return-on-Investment: +41.1%

= (+$198.66/$25,201.34) * (365/7 days)