Albemarle stock has declined sharply in price since this position was established. The primary reason is that the spot price for lithium carbonate has declined by 37% during the last month alone. To add insult to injury, today the Government of Chile announced that they are taking over ownership (privatizing) all lithium mines in their country. Obviously, this announcement is tremendously detrimental to Albemarle's current large lithium mining operations in Chile. So, I decided to immediately close out the Albemarle Covered Call position at a large loss as detailed below.
Albemarle Corporation (ALB) -- Covered Call Position Closed by Decision
The net debit buy/write limit order was executed as follows:
4/3/2023 Bought 100 shares of Albemarle Corporation stock @ $219.98 per share
4/3/2023 Sold 1 ALB April 21st, 2023 $210.00 Call option @ $14.50 per share
Note: The Implied Volatility of the Call option was 43.2 when this position was established, an attractive level given the next earnings report in May is after the 4/21/2023 options expiration date.
4/21/2023 Unwound the ALB Covered Call position by simultaneously buying-to-close the Call option @ $.03 per share and selling-to-close the 100 Albemarle shares at $179.37.
The overall performance result (including commissions) for this Albemarle Corporation position is as follows:
Covered Call Net Investment: $20,548.67
= ($219.98 - $14.50) * 100 shares + $0.67 commission
Net Profit Components:
(a) Option Income: +$1,446.33
= ($14.50 - $.03) * 100 shares - $0.67 commission
(b) Dividend Income: +$0.00
(c) Capital Appreciation (Albemarle stock declined precipitously and the was sold today at $179.37 per share when this Covered Call position was closed out): -$4,061.00
= ($179.37 -$219.98) * 100 shares
Total Net Loss: -$2,614.67
= (+$1,446.33 option income +$0.00 dividend income -$4,061.00 capital appreciation)
Absolute Return-on-Investment: -12.7%
= -$2,614.67/$20,548.67
Equivalent Annualized-Return-on-Investment: -244.4%
= (-$2,614.67/$20,548.67) * (365/19 days)
