Early this morning, the Covered Calls Advisor was notified by my broker that the two EOG Resources Inc. (ticker EOG) April 21st, 2023 $114.00 Call options were exercised yesterday. EOG Resources stock has increased from its purchase price of $119.23 on April 5th to $122.31 at the market close yesterday. The original $1.04 time value in the Calls when the position was established had declined at yesterday's market close to $0.14 per share at the Call options Bid/Ask midpoint, so I was not surprised that (with eight days remaining until the options expiration date), the owner of these EOG Calls exercised their option to buy the 200 shares at the $114.00 strike price in order to receive today's $.825 per share ex-dividend.
I am pleased for this early assignment despite losing the opportunity to capture the $.825 ex-dividend since the +41.7%
annualized-return-on-investment (aroi) achieved by early assignment is greater
than the +35.3% aroi that would have been achieved 8 days from today if this position remained in-the-money and so was
instead assigned on its April 21st options expiration
date.
The post when this EOG Resources Covered Calls position was originally established is here. As detailed below, the return-on-investment result for this EOG Resources Covered Calls position was +0.9% absolute
return in 8 days (equivalent to a +41.7% annualized
return-on-investment).
EOG Resources Inc. (EOG) -- Covered Calls Position Closed Out by Early Assignment
The simultaneous buy/write transaction was:
4/5/2023 Bought 200 EOG Resources Inc. shares @ $119.23
4/5/2023 Sold 2 EOG Resources April 21st, 2023 $114.00 Call options @ $6.27 per share
4/13/2023 EOG Resources Call options owner exercised their two Call options, so the Covered Calls position was closed out early. The two EOG Call options expired worthless and the 200 EOG Resources shares were sold at the $114.00 strike price.
The overall performance results (including commissions) for this EOG Resources Inc. Covered Calls position are as follows:
Buy/Write Purchase Net Investment: $22,593.34
= ($119.23 - $6.27) * 200 shares + $1.34 commission
Net Profit Components:
(a) Options Income: +$1,252.66
= ($6.27 * 200 shares) - $1.34 commission
(b) Dividend Income (Call options exercised early on Wednesday, April 12th, the last business day prior to today's April 13th ex-div date): +$0.00
(c) Capital Appreciation (Early assignment): -$1,046.00
+($114.00 -$119.23) * 200 shares
