Early Assignment of Covered Calls Position in Exxon Mobil Corporation

Early this morning, the Covered Calls Advisor was notified by my broker that the two Exxon Mobil Corporation (ticker XOM) February 24th, 2023 $108.00 Call options were exercised yesterday.  Exxon Mobil stock has increased from its purchase price of $111.85 last Monday to $119.17 at the market close yesterday.  The original $1.20 time value in the Calls when the position was established had declined on yesterday's market close to $0.08 at the Call options Bid/Ask midpoint, so I was not surprised that (with two weeks remaining until the options expiration date), the owner of these XOM Calls exercised their option to buy the 200 shares at the $108.00 strike price in order to receive Monday's $.91 per share ex-dividend.  I am pleased for this early assignment despite losing the opportunity to capture the $.91 ex-dividend since the +59.3% annualized-return-on-investment (aroi) achieved by early assignment is greater than the +37.8% aroi that would have been achieved if this position was instead assigned on its February 24th options expiration date.   

The post when this Exxon Mobil Covered Calls position was originally established is here.  As detailed below, the return-on-investment result for this Exxon Mobil Covered Calls position was +1.1% absolute return in 7 days (equivalent to a +59.3% annualized return-on-investment).  

 

Exxon Mobil Corporation (XOM) -- Covered Calls Position Closed Out by Early Assignment

The simultaneous buy/write transaction was:
2/6/2023 Bought 200 Exxon Mobil shares @ $111.85
2/6/2023 Sold 2 Exxon Mobil February 24th, 2023 $108.00 Call options @ $5.05 per share
2/10/2023 Exxon Mobil Call options owner exercised their two Call options, so the Covered Calls position was closed out early. The two XOM Call options expired worthless and the 200 Exxon shares were sold at the $108.00 strike price.

The overall performance results (including commissions) for this Exxon Mobil Corporation Covered Calls position are as follows:
Buy/Write Purchase Net Investment: $21,361.34
= ($111.85 - $5.05) * 200 shares + $1.34 commission

Net Profit:
(a) Options Income: +$1,008.66
= ($5.05 * 200 shares) - $1.34 commission
(b) Dividend Income (Call options exercised early on Friday, Feb. 10th, the last business day prior to the February 13th ex-div date): +$0.00

(c) Capital Appreciation (Early assignment): -$770.00
+($108.00 -$111.85) * 200 shares

Total Net Profit: +$238.66

= (+$1,008.66 options income +$0.00 dividend income -$770.00 capital appreciation)

 

Absolute Return-on-Investment: +1.1%

= +$238.66/$21,361.34

Annualized Return-on-Investment: +59.3%

= (+$238.66/$21,361.34) * (365/7 days)