Early Assignment of Covered Calls Position in Exxon Mobil Corporation

Early this morning I was notified by my broker's email that the two Exxon Mobil Corporation (ticker XOM) August 25th, 2023 $102.00 Call options were exercised yesterday.  Exxon Mobil stock has increased from its purchase price of $105.04 last Tuesday when this Covered Calls position was established to $111.01 at the market close yesterday.  The original $.80 time value in the Calls when the position was established had declined on yesterday's market close to $0.00, so I was not surprised that the owner of these Exxon Calls exercised their option to buy the 200 shares at the $102.00 strike price in order to receive today'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 +40.9% annualized-return-on-investment (aroi) achieved by early assignment is greater than the +34.1% aroi that would instead have been achieved if this position was instead assigned on its August 25th 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 +0.8% absolute return in 7 days (equivalent to a +40.9% annualized return-on-investment).  

 

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

The simultaneous buy/write transaction was:
8/8/2023 Bought 200 Exxon Mobil shares @ $105.04
8/8/2023 Sold 2 Exxon Mobil August 25th, 2023 $102.00 Call options @ $3.84 per share
8/15/2023 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 $102.00 strike price.

The overall performance results (including commissions) for this Exxon Mobil Covered Calls position are as follows:
Covered Calls Net Investment: $20,241.34
= ($105.04 - $3.84) * 200 shares + $1.34 commission

Net Profit:
(a) Options Income: +$766.66
= ($3.84 * 200 shares) - $1.34 commission
(b) Dividend Income (XOM Call options exercised early on Monday, Aug. 14th, the last business day prior to the August 15th ex-div date): +$0.00

(c) Capital Appreciation: -$608.00
+($102.00 -$105.04) * 200 shares

Total Net Profit: +$158.66

= (+$766.66 options income +$0.00 dividend income -$608.00 capital appreciation)

Absolute Return-on-Investment: +0.8%

= +$158.66/$20,241.34

Annualized Return-on-Investment: +40.9%

= (+$158.66/$20,241.34) * (365/7 days)