Early Assignment of Covered Calls Position in Morgan Stanley

Early this morning, the Covered Calls Advisor was notified by my broker that the three Morgan Stanley (ticker MS) May 5th, 2023 $33.00 Call options were exercised yesterday.  Morgan Stanley stock has increased from its purchase price of $87.91 on April 25th to $89.485 at the market close yesterday.  

I was surprised that the owner of the Morgan Stanley Calls exercised their option to buy the 300 shares at the $85.00 strike price in order to receive today's $.775 per share ex-dividend since, with one week remaining until the May 5th expiration date, there was still $.795 per share time value remaining in the Call options.  By exercising early, the Call owner immediately lost this $.795 per share time value which I therefore immediately obtained as profit.  I am pleased for this early assignment despite losing the opportunity to capture the $.775 dividend since the +56.6% annualized-return-on-investment (aroi) achieved by early assignment is greater than the +45.8% aroi that would be achieved if this position had remained in-the-money for another week and would therefore be assigned instead on its May 5th options expiration date.   

The post when this Morgan Stanley Covered Calls position was originally established is here.  As detailed below, the return-on-investment result for this Morgan Stanley Covered Calls position was +0.5% absolute return in 3 days (equivalent to a +56.6% annualized return-on-investment).

Morgan Stanley (MS) -- New Covered Calls Position
The buy/write transaction was:
4/25/2023 Bought 300 Morgan Stanley shares @ $87.91
4/25/2023 Sold 3 Morgan Stanley 5/5/2023 $85.00 Call options @ $3.31 per share.
4/28/2023 All 3 Morgan Stanley Call options were exercised by their owner, so this MS Covered Calls position was closed out early. The three MS Call options expired worthless and the 300 Morgan Stanley shares were sold at the $85.00 strike price.

The overall performance results (including commissions) for this Morgan Stanley Covered Calls position were as follows:
Covered Calls Cost Basis: $25,382.01
= ($87.91 - $3.31) * 300 shares + $2.01 commission

Net Profit Components:
(a) Options Income: +$990.99
= ($3.31 * 300 shares) - $2.01 commission
(b) Dividend Income (Call options exercised early on Thursday, April 27th, the last business day prior to the April 28th ex-div date): +$0.00

(c) Capital Appreciation: -$873.00
+($85.00 options exercise price - $87.91 stock purchase price) * 300 shares

Total Net Profit: $117.99

= (+$990.99 options income +$0.00 dividend income -$873.00 capital appreciation)

 

Absolute Return-on-Investment: +0.5%

= +$117.99/$25,382.01

Annualized Return-on-Investment: +56.6%

= (+$117.99/$25,382.01) * (365/3 days)