September 29th, 2023 Options Expiration Results

The Covered Calls Advisor Portfolio had two Covered Calls positions with September 29th, 2023 options expirations.  The position containing 500 shares in Uber Technologies Inc. $45.00 strike price position closed in-the-money at $45.99 on yesterday's options expiration date, so the five Calls expired and the shares were called away (i.e. sold) at the $45.00 strike price.  The second position in Match Group Inc. closed out-of-the-money yesterday, so the Calls expired and the 400 Match Group shares remain in the Covered Calls Advisor Portfolio.  A summary of the results for both positions is as follows:

1. Uber Technologies Inc. -- +0.9% absolute return (equivalent to +31.5% annualized return-on-investment) for the 11 days of this investment.  The original post detailing this Covered Calls position is here. 

2. Match Group Inc. -- Match Group's price closed out-of-the-money yesterday at $39.175 which was below its $41.00 strike price, so the four 9/29/20233 Call options expired and 400 MTCH shares now remain in the Covered Calls Advisor Portfolio.  Early next week a decision will be made to either close out the position by selling the shares or continuing with this Covered Calls position by selling four MTCH Calls against the 400 shares of stock currently owned.  The original post detailing this Covered Calls position is here.  

Jeff Partlow

The Covered Calls Advisor
partlow@cox.net

September 22nd, 2023 Options Expiration Results

The Covered Calls Advisor Portfolio had one Covered Calls position in The Walt Disney Company at the September 22nd, 2023 options expiration date and at the $78.00 strike price.  The position closed in-the-money yesterday at $81.32 per share, so the Call options expired and the 200 Disney shares were sold at their $78.00 strike price with the following result:

The Walt Disney Company (DIS) -- +1.6% absolute return (equivalent to +38.4% annualized return-on-investment) for the 15 days of this Covered Calls investment.  The original blog post details when this position was established is here. 

I welcome your questions or feedback at the email address below on any topics related to the Covered Calls investing strategy.  

Jeff Partlow
The Covered Calls Advisor
partlow@cox.net

Covered Call Position Established in Microsoft Corporation

With only ten minutes remaining until the market close today, my buy/write net debit limit order was executed and 100 shares of Microsoft Corporation (ticker symbol MSFT) stock were purchased at $316.80 and 1 October 6th, 2023 $310.00 Call option was sold at $10.78 per share -- a net debit of $306.02 per share.  So, the potential time value profit if the stock is in-the-money and therefore closed out by assignment at expiration is $3.98 per share [$10.78 Call option premium - ($316.80 stock purchase price - $310.00 strike price)].  The Delta was 66.2 which closely approximates a probability of assignment on the options expiration date of 66.2%.  

Microsoft achieved fourteen of the fifteen filters in my Growth Stock screener and the average analysts' target price for Microsoft is $386.95 which is +22.1% above today's purchase price.  

As detailed below, a potential outcome for this Microsoft Corporation investment is +1.3% absolute return-on-investment for the next 14 days (equivalent to +33.8% annualized-return-on-investment) if the stock closes above the $310.00 strike price on the October 6th, 2023 options expiration date.

Microsoft Corporation (MSFT) -- New Covered Call Position

The net debit buy/write limit order was executed as follows:
9/22/2023 Bought 100 shares of Microsoft stock @ $316.80 per share.  
9/22/2023 Sold 1 MSFT October 6th, 2023 $310.00 Call option @ $10.78 per share.

A possible overall performance result (including commissions) if this position is assigned on its 10/6/2023 option expiration date is as follows:
Covered Calls Net Investment: $30,602.67
= ($316.80 - $10.78) * 100 shares + $.67 commission

Net Profit Components:
(a) Options Income: +$1,077.33
= ($10.78 * 100 shares) - $.67 commission
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If Microsoft stock is above the $310.00 strike price at the October 6th option expiration date): -$680.00
= ($310.00 - $316.80) * 100 shares

Potential Total Net Profit (If assigned at expiration): +$397.33
= (+$1,077.33 option income + $0.00 dividend income - $680.00 capital appreciation)

Potential Absolute Return-on-Investment: +1.3%
= +$397.33/$30,602.67
Potential Equivalent Annualized-Return-on-Investment: +33.8%
= (+$397.33/$30,602.67) * (365/14 days)

Continuation of Covered Calls Positions in iShares China Large-Cap ETF

Last Friday, the September 15th, 2023 Covered Calls positions in iShares China Large-Cap ETF (ticker FXI) closed out-of-the-money.  So the 10 Call options expired and the 1,000 shares remained in the Covered Calls Advisor Portfolio.  This morning, I decided to continue this Covered Calls positions by selling 10 Call options to rollout to the October 13th, 2023 options expiration date.  The transactions-to-date for this position as well as potential return-on-investment results if the position is assigned on its Oct. 13th, 2023 options expiration date is detailed below.

iShares China Large-Cap ETF (FXI) -- Continuation of Covered Calls Position

The original Buy/Write transaction was as follows:
9/1/2023 Bought 1,000 shares of iShares China Large-Cap ETF @ $27.99 per share.  
9/1/2023 Sold 10 FXI Sept. 15th, 2023 $28.00 Call options @ $.63 per share.
9/15/2023 Ten FXI Call options closed out-of-the-money, so these options expired and 1,000 shares remain in the Covered Calls Advisor Portfolio.
9/22/2023 Continued this iShares China Large-Cap ETF Covered Calls position by selling 10 FXI October 13th, 2023 Call options at the $27.50 strike price for $.60 per share.  The iShares China Large-Cap ETF share price was $27.21 when these Calls were sold and their Implied Volatility was 27.7.

A possible overall performance results (including commissions) for this iShares China Large-Cap ETF Covered Calls position if assigned on the 10/13/2023 options expiration date is as follows:
FXI Covered Calls Net Investment: $27,366.70
= ($27.99 - $.63) * 1,000 shares + $6.70 commission

Net Profit:
(a) Options Income: +$1,216.60
= ($.63 + $.60) * 1,000 shares - $13.40 commission
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If 1,000 iShares China Large-Cap ETF shares assigned at the $27.50 strike price at the 10/13/2023 expiration): -$490.00
+($27.50 - $27.99) * 1,000 shares

Total Net Profit Potential (If 1,000 iShares China Large-Cap ETF shares assigned at the $27.50 strike price at the options expiration date): +$726.60
= (+$1,216.60 options income +$0.00 dividend income -$490.00 capital appreciation)

Potential Absolute Return-on-Investment: +2.7%
= +$726.60/$27,366.70
Potential Annualized Return-on-Investment: +23.1%
= (+$726.60/$27,366.70) * (365/42 days)

Continuation of Covered Calls Positions in Halozyme Therapeutics Inc. and SolarEdge Technologies Inc.

Last Friday, the September 15th, 2023 Covered Calls positions in Halozyme Therapeutics Inc. (ticker HALO) and SolarEdge Technologies Inc. (ticker SEDG) closed out-of-the-money.  So the Calls expired and shares remained in the Covered Calls Advisor Portfolio.  This morning, I decided to continue both of these Covered Calls positions by selling Call options to roll out to future options expiration dates.  The transactions-to-date for these positions as well as potential return-on-investment results if the positions are assigned on their October 20th, 2023 options expiration date are detailed below.

1. Halozyme Therapeutics Inc. (HALO) -- Continuation of Covered Calls Position

The net debit buy/write limit order was executed as follows:

8/25/2023 Bought 400 shares of Halozyme Therapeutics stock @ $42.62 per share.  
8/25/2023 Sold 4 HALO September 15th, 2023 $40.00 Call options @ $3.36 per share.
Note: the Implied Volatility of the Calls was 38.8 when this position was established. 

9/15/2023 Continued this Halozyme Covered Calls position by selling 4 HALO October 20th, 2023 Call options at the $40.00 strike price for $2.00 per share.  The Halozyme share price was $40.22 when these Calls were sold and their Implied Volatility was 37.6.

A possible overall performance result (including commissions) if this position is assigned on its 10/20/2023 options expiration date is follows:
Halozyme Covered Calls Net Investment: $15,706.68
= ($42.62 - $3.36) * 400 shares + $2.68 commission

Net Profit Components:
(a) Options Income: +$2,138.64
= ($3.36 + $2.00) * 400 shares - $5.36 commission
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If Halozyme stock is above the $40.00 strike price at the October 20th expiration): -$1,048.00
= ($40.00 - $42.62) * 400 shares

Potential Total Net Profit (If assigned at expiration): +$1,090.64
= (+$2,138.64 options income + $0.00 dividend income - $1,048.00 capital appreciation)

Potential Absolute Return-on-Investment: +6.9%
= +$1,090.64/$15,706.68
Potential Equivalent Annualized-Return-on-Investment: +45.3%
= (+$1,090.64/$15,706.68) * (365/56 days)

2.  SolarEdge Technologies Inc. (SEDG) -- Continuation of Covered Calls Position

The net debit buy/write limit order was executed as follows:
8/22/2023 Bought 200 shares of SolarEdge Technologies stock @ $162.21 per share.  
8/22/2023 Sold 2 SEDG September 15th, 2023 $155.00 Call options @ $12.30 per share.
Note: the Implied Volatility of the Calls was 48.1 when this position was established.  
09/15/2023 Continued this SolarEdge Covered Calls position by selling 2 SEDG Oct. 20th, 2023 Call options at the $145.00 strike price for $5.70 per share.  The SolarEdge share price was $140.73 when these Calls were sold and their Implied Volatility was 45.3.

A possible overall performance result (including commissions) if this position is assigned on its 10/20/2023 options expiration date is follows:
Covered Calls Net Investment: $29,983.34
= ($162.21 - $12.30) * 200 shares + $1.34 commission

Net Profit Components:
(a) Options Income: +$3,597.32
= ($12.30 + $5.70) * 200 shares - $2.68 commission
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If SolarEdge stock is above the $145.00 strike price at the October 20th expiration): -$3,442.00
= ($145.00 - $162.21) * 200 shares

Potential Total Net Profit (If assigned at expiration): +$155.32
= (+$3,597.32 options income + $0.00 dividend income - $3,442.00 capital appreciation)

Potential Absolute Return-on-Investment: +0.5%
= +$155.32/$29,983.34
Potential Equivalent Annualized-Return-on-Investment: +3.2%
= (+$155.32/$29,983.34) * (365/59 days)

Established Covered Calls Position in Match Group Inc.

With less than 30 minutes remaining in today's trading session, my buy/write limit order for Match Group (ticker MTCH) was executed.  My net debit limit price was $40.52 and four hundred shares were purchased at $42.78 and five September 29th, 2023 Call options were sold at $2.26 at the $41.00 strike price.  The time value was $.64 per share = [$41.00 strike price - ($43.07 stock purchase price - $2.21 Call options price)].   Given my current cautious stock market outlook, a moderately in-the-money Covered Calls position was established with a Delta of 70.3 which approximates a 70.3% probability this position will be in-the-money and therefore assigned on the August 18th, 2023 options expiration date.  As desired, there is no earnings report prior to the options expiration date.

Three similar prior Covered Calls positions in the Match Group were assigned on their options expiration dates and I decided to follow-up today with a similar position since I remain bullish on the company's prospects.  The Match Group is the leading online dating services company worldwide including several brands that include Tinder, Match, and Hinge.  Match is profitable and their earnings per share and revenues seem to be at an inflection point where they have begun to obtain regular quarterly revenue and profit increases based on their worldwide presence and their growth opportunities (especially in Asia but also in Europe).  As shown in the detailed chart below, Match Group meets all 17 filters of my multifactor stock screener for Value+Profitability+Growth.  Also, Analysts' Average Target Price of $55.23 is +29.1% above today's $42.78 stock purchase price. 

As detailed below, the potential return-on-investment results for this Match Group Inc. Covered Calls position is +1.2% absolute return (equivalent to +38.6% annualized return-on-investment for the next 11 days) if the stock is assigned on the September 29th, 2023 options expiration date.

Match Group Inc. (MTCH) -- New Covered Calls Position

The buy/write transaction was:
9/18/2023 Bought 400 Match Group Inc. shares @ $42.78
9/18/2023 Sold 4 MTCH 9/29/2023 $41.00 Call options @ $2.26 per share.

A possible overall performance result (including commissions) for this Match Group Covered Calls position is as follows:
Match Group Covered Calls Net Investment: $16,210.68
= ($42.78 - $2.26) * 400 shares + $2.68 commission

Net Profit:
(a) Options Income: +$900.65
= ($2.26 * 400 shares) - $3.35 commission
(b) Dividend Income: +$0.00
= ($0.00 dividends per share x 400 shares)
(c) Capital Appreciation (If MTCH shares assigned at $41.00 strike price at expiration): -$712.00
+($41.00 - $42.78) * 400 shares

Total Net Profit (If options exercised on the 9/29/2023 options expiration date): +$188.65

= (+$900.65 options income +$0.00 dividend income -$712.00 capital appreciation)

Potential Absolute Return-on-Investment (If the Match Group Inc. shares are assigned at the $41.00 strike price at the Sept. 29th, 2023 options expiration date): +1.2%

= +$188.65/$16,210.68

Potential Annualized Return-on-Investment (If 400 Match Group shares assigned at $41.00 at the 9/29/2023 options expiration): +38.6%

= (+$188.65/$16,210.68) * (365/11 days)

Covered Calls Established in Uber Technologies Inc.

Today my buy/write net debit limit order was executed and 500 shares of Uber Technologies Inc.(ticker symbol UBER) stock were purchased at $46.81 and 5 September 29th, 2023 $45.00 Call options were sold at $2.23 per share -- a net debit of $44.58 per share -- so the potential time value profit if the stock is in-the-money and therefore closed out by assignment at expiration is $.42 per share [$2.23 Call options premium - ($46.81 stock purchase price - $45.00 strike price)].  

This is a repeat of nine similar Covered Calls positions in Uber during the past five months and all were successfully assigned on their respective options expiration dates. Like the prior Uber positions, today's new position was established at an in-the-money strike price with an approximate probability when this position was established that the stock will be in-the-money and therefore assigned on the options expiration date of 75.1%.

As detailed below, a potential outcome for this Uber Technologies investment is +0.9% absolute return-on-investment for the next 11 days (equivalent to +31.5% annualized-return-on-investment) if the stock closes above the $45.00 strike price on the September 29th, 2023 options expiration date.

Uber Technologies Inc. (UBER) -- New Covered Calls Position

The net debit buy/write limit order was executed as follows:
9/18/2023 Bought 500 shares of Uber Technologies Inc. stock @ $46.81 per share.  
9/18/2023 Sold 5 Uber September 29th, 2023 $45.00 Call options @ $2.23 per share.
Note: this was a simultaneous Buy/Write transaction and the Implied Volatility of the Calls was 33.0 when this position was established.  

A possible overall performance result (including commissions) if this position is assigned on its 9/29/2023 options expiration date is follows:
Covered Calls Net Investment: $22,293.35
= ($46.81 - $2.23) * 500 shares + $3.35 commission

Net Profit Components:
(a) Options Income: +$1,116.50
= ($2.23 * 500 shares) - $3.35 commission
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If Uber stock is above the $45.00 strike price at the September 29th expiration): -$905.00
= ($45.00 - $46.81) * 500 shares

Potential Total Net Profit (If assigned at expiration): +$211.50
= (+$1,116.50 options income + $0.00 dividend income - $905.00 capital appreciation)

Potential Absolute Return-on-Investment: +0.9%
= +$211.50/$22,293.35
Potential Equivalent Annualized-Return-on-Investment: +31.5%
= (+$211.50/$22,293.35) * (365/11 days)

Monthly Options Expiration Results through September 15th, 2023

Each month after the monthly options expiration date, this summary report provides the results on all positions that have been closed out during the past month (i.e. since the prior month's options expiration date). So this post covers the period from the day after last month's August 18th, 2023 options expiration through yesterday's September 15th, 2023 monthly options expiration date.  

During this past month, the Covered Calls Advisor Portfolio held a total of fifteen positions.  Eleven positions were closed out at a profit, one position was closed out at a loss, three positions expired out-of-the-money on yesterday's monthly options expiration date (so those shares currently remain in the Covered Calls Advisor Portfolio), and one position in Delta Air Lines was rolled out yesterday to the October 6th, 2023 options expiration date.   

The specific results for each position are summarized as follows: 

• Three Covered Calls positions expired in-the-money (stock price above the strike price) on yesterday's September 15th, 2023 monthly options expiration date as follows: 

1. Cigna Group -- +1.2% absolute return-on-investment in 14 days (equivalent to a +30.1% annualized return-on-investment).
2. Honeywell International Inc. -- +2.5% absolute return-on-investment in 46 days (equivalent to a +20.2% annualized return-on-investment).
3. Match Group Inc. -- +3.3% absolute return-on-investment in 21 days (equivalent to a +57.2% annualized return-on-investment).

• Four Covered Calls positions expired in-the-money on their respective Weekly options expiration dates during the past month as follows:

1. PayPal Holdings Inc. -- +1.1% absolute return-on-investment in 14 days (equivalent to a +28.3% annualized return-on-investment).
2. Alphabet Inc. -- +1.2% absolute return-on-investment in 11 days (equivalent to a +38.6% annualized return-on-investment).
3. iShares China Large-Cap ETF -- +1.0% absolute return-on-investment in 30 days (equivalent to a +11.8% annualized return-on-investment).
4. Uber Technologies Inc. -- +1.9% absolute return-on-investment in 17 days (equivalent to a +41.4% annualized return-on-investment).

• Two Covered Call positions were closed out by early assignment on the day prior to their respective ex-dividend dates as follows: 

1. Bank of America Corporation -- +1.0% absolute return-on-investment in 10 days (equivalent to a +36.0% annualized return-on-investment).
2. McDonald's Corporation -- +0.7% absolute return-on-investment in 10 days (equivalent to a +26.9% annualized return-on-investment).

• Two Covered Call positions were closed out by early decision as follows: 

1. Archer-Daniels-Midland Company -- -1.0% absolute return-on-investment in 17 days (equivalent to a -22.0% annualized return-on-investment).
2. Halliburton Company -- +1.3% absolute return-on-investment in 8 days (equivalent to a +60.7% annualized return-on-investment).

• Three Covered Calls positions in Halozyme Therapeutics Inc., iShares China Large-Cap ETF, and SolarEdge Technologies Inc. closed out-of-the-money yesterday on their September 15th, 2023 monthly options expiration date, so the options expired and the shares now remain in the Covered Calls Advisor Portfolio.  Early next week, a decision will be made to either close out the positions by selling the shares or to continue the Covered Calls positions by selling future Call options against the shares currently held.  As always, the details of all transactions will be posted on this blog site on the same day the transactions occur.

My final Covered Calls position in Delta Air Lines Inc. was due to expire yesterday.  Like all airlines, Delta's costs are rising substantially as a result of the recent spike upward in the price of jet fuel.  The stock price was well out-of-the-money and I decided to continue the position, so I rolled down and out from the 9/15 $43.00 strike price to the October 6th $41.00 strike price.  The transactions history and a potential return-on-investment result if the position is assigned on its 10/6 expiration date is shown below:

Delta Air Lines Inc. (DAL) -- Continuation of Covered Calls Position

The original Buy/Write transaction was as follows:
7/24/2023 Bought 500 shares of Delta Air Lines Inc. @ $47.49 per share 
7/24/2023 Sold 5 DAL August 4th, 2023 $46.00 Call options @ $1.93 per share
8/4/2023 Five DAL Calls expired out-of-the-money so the 500 shares remained in the Covered Calls Advisor Portfolio.
8/7/2023 Continued this Delta Air Lines Inc. Covered Calls position by selling 5 Delta August 18th, 2023 Call options at the $45.00 strike price for $.56 per share.  The FXI share price was $44.93 when these Calls were sold and their Implied Volatility was 39.6.

8/18/2023 Five DAL Calls expired out-of-the-money so the 500 shares remained in the Covered Calls Advisor Portfolio.
8/21/2023 Continued this Delta Air Lines Inc. Covered Calls position by selling 5 Delta September 1st, 2023 Call options at the $43.00 strike price for $.49 per share.  The Delta share price was $41.80 when these Calls were sold.

9/1/2023 Continued this Delta Air Lines Inc. Covered Calls position by selling 5 Delta September 15th, 2023 Call options at the $43.00 strike price for $.54 per share.

9/15/2023 Rolled the 5 DAL Call options down and out to the October 6th, 2023 $41.00 strike price at $.53 per share when the stock was trading at $39.83.

 
A possible overall performance result (including commissions) for this Delta Air Lines Inc. Covered Calls position if the stock is in-the-money at its options expiration date is as follows:
Delta Air Lines Covered Calls Net Investment: $22,783.35
= ($47.49 - $1.93) * 500 shares + $3.35 commission

Net Profit Potential:
(a) Options Income: +$2,203.25
= ($1.93 + $.95 + $.49 + $.54 + $.53) * 500 shares - $16.75 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If 500 Delta Air Lines shares assigned at $41.00 strike price at the 10/6/2023 options expiration date): -$3,245.00
+($41.00 - $47.49) * 500 shares

Potential Total Net Profit (If 500 Delta Air Lines shares assigned at the $41.00 strike price upon options expiration): -$1,041.75
= (+$2,203.25 options income +$0.00 dividend income -$3,245.00 capital appreciation)

Absolute Return-on-Investment Potential: -4.6%
= -$1,041.75/$22,783.35
Annualized Return-on-Investment Potential: -22.6%
= (-$1,041.75/$22,783.35) * (365/74 days)

During the past year (last 12 months) 117 of 131 positions (89.3%) in the Covered Calls Advisor Portfolio (CCAP) were closed out at a profit.  The Covered Calls Advisor Portfolio weighted average annualized-return-on-investment (aroi) was +21.6% during the past year and the average holding period for these 131 closed positions was 18.1 days.  In comparison, the benchmark S&P 500 returned +14.1% during the same prior one-year period.   

This Covered Calls Advisor blog is available to anyone interested in learning about implementing a successful Covered Calls investing strategy.  As always, I also encourage you to email me at partlow@cox.net any time you would like my feedback on your Covered Call position ideas or your questions on anything related to the Covered Calls investing strategy.  

Best Wishes and Godspeed,

Jeff Partlow
Covered Calls Advisor
partlow@cox.net

Covered Calls Established in U.S. Bancorp

An October 6th, 2023 Covered Calls buy/write limit order was executed this morning in U.S. Bancorp (ticker USB) at a net debit price of $33.58 per share.  Five hundred shares were purchased at $35.23 and five October 6th, 2023 $34.00 strike price Call options were sold at $1.65 per share.  The corresponding extrinsic value (i.e. time value) was $.42 per share [$1.65 Call options premium - ($35.23 stock purchase price - $34.00 strike price)].   There is an intervening ex-dividend prior to the options expiration date on September 28th at $.48 per share (a 5.7% annual dividend yield) which is included in the potential return-on-investment results shown below.  

Some key numbers for this U.S. Bancorp Covered Calls position are:

Covered Calls Net Investment: $16,793.35
= ($35.23 - $1.65) x 500 shares + $3.35 commissions 

1. If Assigned Early on the Day Prior to the Ex-Dividend Date:
Total Potential Profit: $206.65
= $.42 time value x 500 shares - $3.35 commissions
Days Until the Sept. 28th, 2023 Ex-Dividend Date: 13
Absolute Return-on-Investment: +1.2%
= $206.65 time value profit /$16,793.35 net investment
Annualized Return-on-Investment if Assigned Early: +34.5%
= ($206.65/$16,793.35) x (365/13 days)

2. If Assigned on the October 6th, 2023 Options Expiration Date:
Dividend Income: $240.00
= $.48 per share x 500 shares
Total Potential Profit:  $446.65
= $206.65 time value profit + $240.00 dividend income
Days Until the October 6th, 2023 Options Expiration: 21
Absolute Return-on-Investment if Assigned at Expiration: +2.7%
= $446.65 total profit potential /$16,793.35 net investment
=Annualized Return-on-Investment if Assigned at Expiration: +46.2%
= ($446.65 total profit /$16,793.35) x (365/21 days)

Jeff Partlow (The Covered Calls Advisor)
partlow@cox.net

 

September 8th, 2023 Options Expiration Results

The Covered Calls Advisor Portfolio had one Covered Calls position in Uber Technologies Inc. at the September 8th, 2023 options expiration date and at the $43.00 strike price.  The position closed in-the-money yesterday at $47.24 per share, so the Call options expired and the 500 Uber shares were sold at their $43.00 strike price with the following results:

Uber Technologies Inc. (UBER) -- +1.9% absolute return (equivalent to +41.4% annualized return-on-investment) for the 17 days of this Covered Calls investment.  The original blog post details when this position was established is here. 

I welcome your questions or feedback at the email address below on any topics related to the Covered Calls investing strategy.  

Best Wishes,

Jeff Partlow
The Covered Calls Advisor
partlow@cox.net

Established Covered Calls Position in The Walt Disney Company

A Covered Calls position was established in The Walt Disney Company (DIS) when the Covered Calls Advisor's buy/write limit order at a net debit limit price of $76.78 was executed. Two hundred shares were purchased at $79.83 and two September 22nd, 2023 Call options were sold at $3.05 at the $78.00 strike price.  The time value was $1.22 per share = [$78.00 strike price - ($79.83 stock purchase price - $3.05 Call options price)].   Given my current stock market outlook, a moderately in-the-money Covered Calls position was established with a Delta of 65.6 which approximates a 65.6% probability this position will be in-the-money and therefore assigned on the Sept 22nd, 2023 options expiration date.  As desired, there is no earnings report prior to the options expiration date.

Disney currently faces a variety of difficult challenges and their stock is in the doldrums.  But I think the current negative sentiment is reaching its nadir and is likely to improve (along with its stock price) from here.  I am confident that under the strong leadership of Bob Iger combined with Disney's exceptional brands, they will successfully navigate through their challenges in their turnaround efforts during the next couple of years.  

As detailed below, the potential return-on-investment results for this Disney Covered Calls position is +1.6% absolute return (equivalent to +38.4% annualized return-on-investment for the next 15 days) if the stock is assigned on the September 22nd options expiration date.

The Walt Disney Company (DIS) -- New Covered Calls Position

The buy/write transaction was:
9/7/2023 Bought 200 The Walt Disney Company shares @ $79.83
9/7/2023 Sold 2 DIS 9/22/2023 $78.00 Call options @ $3.05 per share.

A possible overall performance result (including commissions) for this Disney Covered Calls position if it is in-the-money on the options expiration date is as follows:
Covered Call Net Investment: $15,357.34
= ($79.83 - $3.05) * 200 shares + $1.34 commission

Net Profit:
(a) Options Income: +$608.66
= ($3.05 * 200 shares) - $1.34 commission
(b) Dividend Income: +$0.00
= ($0.00 dividends per share x 200 shares)
(c) Capital Appreciation (If DIS shares assigned at $78.00 strike price at expiration): -$366.00
+($78.00 - $79.83) * 200 shares

Total Net Profit (If options exercised on the 9/22/2023 options expiration date): +$242.66

= (+$608.66 options income +$0.00 dividend income -$366.00 capital appreciation)

Absolute Return-on-Investment (If Disney shares assigned at $78.00 at the Sept 22nd, 2023 expiration): +1.6%

= +$242.66/$15,357.34

Annualized Return-on-Investment: +38.4%

= (+$242.66/$15,357.34) * (365/15 days)

Early Close Out of Covered Calls in Halliburton Company

Last Monday (August 28th, 2023), a Covered Calls position was established in Halliburton Company (ticker HAL) at the $37.00 strike price and for the September 15th, 2023 options expiration date. The stock price has increased from $38.40 when purchased to $40.83 today.  Since today is Halliburton's quarterly ex-dividend date, I will also receive the $.16 per share dividend payment which is included in the return-on-investment results detailed below.

I have a "Rule-of-Thumb for Early Close" table (shown below), and this Halliburton Covered Calls position exceeded the minimum annualized-return-on-investment (aroi) threshold for closing out a position early. This position has been held for 8 days now and there were 18 days total duration until the 9/15/2023 options expiration date which corresponds to category #3 in the rules table below. The category #3 decision criteria is that the aroi if closed early should be at least 60% higher than the aroi if the position was to instead be assigned on the Sept. 15th options expiration date, which is +34.3% for this Halliburton Covered Calls position.  Therefore, the minimum aroi threshold for early close out is +54.9% (60% above the +34.3% aroi at expiration).  As detailed below, the +60.7% aroi achieved by early close exceeded the minimum +54.9% aroi threshold requirement in this instance.

Halliburton Company (HAL) -- Covered Calls Position Closed Out Early

The transactions were:
8/28/2023 Bought 500 Halliburton Co. shares @ $38.40
8/28/2023 Sold 5 HAL 9/15/2023 $37.00 Call options @ $1.86
9/5/2023 Quarterly ex-dividend of $.16 per share
9/5/2023 Unwound Halliburton Covered Calls position by simultaneously Selling-to-Close 500 shares @ $40.83 and Buying-to-Close 5 HAL 9/15/2023 $37.00 Call options @ $3.95 per share.

The overall performance results (including commissions) for this Halliburton Co. Covered Calls position are as follows:
Covered Calls Cost Basis: $18,273.35
= ($38.40 - $1.86) * 500 shares + $3.35 commissions

Net Profit Components:
(a) Options Income: -$1,051.70
= ($1.86 - $3.95) * 500 shares - $6.70
(b) Dividend Income (9/5/2023 ex-dividend): +$80.00
= ($.16 dividend per share x 500 shares)
(c) Capital Appreciation (HAL shares sold at $40.83 per share on 9/5/2023): +$1,215.00
+($40.83 -$38.40) * 500 shares

Total Net Profit: +$243.30

= (-$1,051.70 options income + $80.00 dividend income + $1,215.00 capital appreciation)

Absolute Return-on-Investment: +1.3%

= +$243.30/$18,273.35

Annualized Return-on-Investment: +60.7%

= (+$243.30/$18,273.35) * (365/8 days)

August 4th, 2023 Options Expiration Results

The Covered Calls Advisor Portfolio had three Covered Calls positions with September 1st, 2023 options expirations.  Two positions (Alphabet Inc. and iShares China Large-Cap ETF) closed in-the-money so their Calls expired and the shares were called away (i.e. sold) at their respective strike prices.  The third position in Delta Air Lines Inc. closed out-of-the-money so the Calls expired and the 500 Delta Air Lines shares remain in the Covered Calls Advisor Portfolio.  A summary of the results for each of these three positions are as follows:

1. Alphabet Inc. -- +1.2% absolute return (equivalent to +38.6% annualized return-on-investment) for the 11 days of this investment.  This Covered Call position was assigned at the $123.00 strike price on its 9/1/2023 options expiration date since Alphabet's stock closed in-the-money at $135.66 per share.  The original post detailing the history of this Covered Calls position is here. 

2. iShares China Large-Cap ETF (FXI) -- +1.0% absolute return (equivalent to +11.8% annualized return-on-investment) for the 30 days of this investment.  This Covered Calls position was assigned at the $27.50 strike price on its 9/1/2023 options expiration date since FXI closed in-the-money yesterday at $28.02 per share.  The most recent post detailing this Covered Calls position is here.  

3. Delta Air Lines Inc. (DAL) -- Delta's price closed yesterday at $42.86 which was below its $43.00 strike price, so the five 9/1/20233 Delta Air Lines Call options expired and 500 DAL shares now remain in the Covered Calls Advisor Portfolio.  Early next week a decision will be made to either close out the position by selling the shares or continuing with this Covered Calls position by selling five DAL Calls against the 500 Delta shares currently owned.  As always, I will post the transactions-to-date for this position when my next transaction is executed.

My Covered Calls position in Halliburton goes ex-dividend next Tuesday at $.16 per share. Since the stock market is closed on Monday (Labor Day Holiday), yesterday (Friday) was the last trading day prior to Tuesday's ex-dividend date.  With only $.02 time value in the Calls and because there was still two weeks remaining until the Sept. 15th options expiration date, I expected these Calls to be exercised by the owner yesterday (Friday) and the shares called away (i.e., sold) at the $37.00 strike price.  Most often, on the last trading day prior to an ex-dividend date, I correctly predict whether or not the shares will be called away.  But Call owners have a variety of objectives with the Calls they own, so occasionally I'm surprised -(but not disappointed) that I am capturing the dividend and will now continue to retain this Halliburton Covered Calls position with its September 15th expiration date.

I welcome your feedback, at my email address shown below with your questions or topics related to this blog post specifically or with anything related to the Covered Calls investing strategy.

Best Wishes,

Jeff Partlow
The Covered Calls Advisor
partlow@cox.net

Established Covered Calls Position in iShares China Large-Cap ETF

A second Covered Calls position was established in iShares China Large-Cap ETF (FXI). The first position expires today and is likely to be called away since it is in-the-money and near the closing time of today's trading. I want to maintain an ongoing Covered Calls position in iShares China Large-Cap ETF so this second position has a two-week duration and expires on the September 15th, 2023 monthly options expiration date.  This is consistent with my ongoing plan to establish approximately bi-weekly Covered Calls in FXI in upcoming weeks this year.  Finally, the fact that investing in China-based companies improves the diversification of the Covered Calls Advisor Portfolio appeals to me.  In short, it serves as a counterbalance to my normal home country bias.  

One thousand shares of iShares China Large-Cap ETF were purchased at $27.99 and ten Sept. 15th, 2023 Call options were sold at the $28.00 strike price at $.63 per share--a buy/write net debit transaction of $27.36 per share which provides a $.64 per share time value profit potential.  

As detailed below, a potential return-on-investment result is +2.3% absolute return (equivalent to +59.4% annualized return-on-investment for the next 14 days) if the iShares China Large-Cap ETF share price is in-the-money (i.e. above the $28.00 strike price) and therefore assigned on the September 15th, 2023 options expiration date.

 
iShares China Large-Cap ETF (FXI) -- New Covered Calls Position 
The Buy/Write transaction was as follows:
9/1/2023 Bought 1,000 shares of iShares China Large-Cap ETF @ $27.99 per share.  
9/1/2023 Sold 10 FXI Sept. 15th, 2023 $28.00 Call options @ $.63 per share.  

A possible overall performance result (including commissions) for this iShares China Large-Cap ETF Covered Calls position is as follows:
FXI Covered Calls Net Investment: $27,366.70
= ($27.99 - $.63) * 1,000 shares + $6.70 commission

Net Profit:
(a) Options Income: +$623.30
= ($.63 * 1,000 shares) - $6.70 commission
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If 1,000 iShares China Large-Cap ETF shares assigned at $28.00 strike price at expiration): +$10.00
+($28.00 - $27.99) * 1,000 shares

Total Net Profit Potential (If 1,000 iShares China Large-Cap ETF shares assigned at $28.00 strike price at expiration): +$633.30
= (+$623.30 options income +$0.00 dividend income +$10.00 capital appreciation)

Potential Absolute Return-on-Investment: +2.3%
= +$623.30/$27,366.70
Potential Annualized Return-on-Investment: +59.4%
= (+$623.30/$27,366.70) * (365/14 days)

Covered Call Position Established in The Cigna Group

Today a Covered Call position was established in The Cigna Group (ticker symbol CI) when one hundred Cigna shares were purchased at $277.11 and one September 15th, 2023 Call option was sold for $6.51 per share at the $272.50 strike price.  The buy/write net debit limit order at $270.60 was executed, so the potential time value profit is $1.90 per share [$6.51 Call option premium - ($277.11 stock purchase price - $272.50 strike price)].  There is an upcoming quarterly ex-dividend of $1.23 (annual dividend yield of 1.8%) next Tuesday (Sept. 5th), so the potential return-on-investment results detailed below for this position includes this dividend income.    

As preferred by the Covered Calls Advisor, Cigna's next quarterly earnings report on November 2nd, 2023 will be after the September 15th options expiration date.  Given the Covered Calls Advisor's current Overall Market Meter indicator of Neutral, a slightly in-the-money Covered Call position was established with a Delta of 68.7 was selected since it meets my current minimum annualized return-on-investment criteria of +25.0%.  Cigna is currently at an attractive valuation.  In addition, it appears in two of my multifactor stock screeners: (1) StockRover Overall; and (2) Shareholder Yield.

As detailed below, a potential return-on-investment result is +1.2% absolute return-on-investment (equivalent to +30.1% annualized return-on-investment over the next 14 days) if the stock is assigned on the September 15th, 2023 options expiration date.

Cigna Corporation (CI) -- New Covered Calls Position
The buy/write transaction today was as follows:
9/1/2023 Bought 100 Cigna Corp. shares @ $277.11
9/1/2023 Sold 1 Cigna 9/15/2023 $272.50 Call option @ $6.51
9/5/2023 Upcoming quarterly ex-dividend of $1.23 per share

The overall performance results (including commissions) for this Cigna Covered Call position if the stock is in-the-money at the 9/15/2023 options expiration are as follows:
Covered Call Cost Basis: $27,060.67
= ($277.11 - $6.51) * 100 shares + $.67 commissions

Net Profit Components:
(a) Options Income: +$650.33
= ($6.51 * 100 shares) - $.67 commissions
(b) Dividend Income (If Cigna shares assigned at the Sept 15th, 2023 options expiration): +$123.00
= ($1.23 dividend per share x 100 shares)
(c) Capital Appreciation (If Cigna shares assigned at the $272.50 strike price at options expiration): -$461.00
+($272.50 - $277.11) * 100 shares

Total Net Profit (If Cigna shares assigned at $272.50 strike price at the 9/15/2023 expiration): +$312.33

= (+$650.33 + $123.00 - $461.00)

Potential Absolute Return-on-Investment: +1.2%

= +$312.33/$27,030.67

Potential Annualized Return-on-Investment: +30.1%

= (+$312.33/$27,030.67) *(365/14 days)