At last Friday's monthly options expiration date, eleven Covered Calls positions ended with their stock price below their respective strike prices (i.e. out-of-the-money). Today I closed out four of these positions by selling their shares. In each instance these companies have upcoming quarterly earnings reports during the next two weeks and given the stock price volatility that often occurs immediately after earnings reports, I decided to sell my shares prior to earnings. Two positions (Amdocs and Mondelez) closed at a net loss and the other two positions (Halozyme and Yum China) closed with small net profits. Detailed transactions for each position and the return-on-investment results are provided below.
The buy/write transaction was:
3/20/2024 Bought 200 Amdocs Ltd. shares @ $91.53.
3/20/2024 Sold 2 DOX 4/19/2024 $90.00 Call options @ $2.63 per share.
3/27/2024 Upcoming annual ex-dividend of $.48 per share.
4/19/2024 2 Calls expired out-of-the-money with the stock at $85.59 per share, so the 200 Amdocs shares remained in the Covered Calls Advisor Portfolio.
4/22/2024 Closed out this Amdocs position by selling 200 shares at $86.42.
The overall performance results (including commissions) for this Amdocs Ltd. Covered Calls position is as follows:
Covered Calls Net Investment: $17,781.34
= ($91.53 - $2.63) * 200 shares + $1.34 commission
Net Profit Components:
(a) Options Income: +$524.66
= ($2.63 * 200 shares) - $1.34 commission
(b) Dividend Income: +$96.00
= ($.48 dividend per share x 200 shares)
The buy/write transaction was:
3/19/2024 Bought 300 Mondelez shares @ $72.25
3/19/2024 Sold 2 MDLZ 4/5/2024 $71.00 Call options @ $1.65 per share. The Implied Volatility of these Calls was 11.9 when this position was established.
The overall performance results (including commissions) for this Amdocs Ltd. Covered Calls position is as follows:
Covered Calls Net Investment: $17,781.34
= ($91.53 - $2.63) * 200 shares + $1.34 commission
Net Profit Components:
(a) Options Income: +$524.66
= ($2.63 * 200 shares) - $1.34 commission
(b) Dividend Income: +$96.00
= ($.48 dividend per share x 200 shares)
(c) Capital Appreciation (200 Amdocs shares sold at $86.42 per share: -$1,022.00
+($86.42 - $91.53) * 200 shares Total Net Loss: -$401.34
= (+$524.66 options income +$96.00 dividend income -$1,022.00 capital appreciation)
Absolute Return-on-Investment: -2.3%
= -$401.34/$17,781.34
Annualized Return-on-Investment: -25.0%
= (-$401.34/$17,781.34) * (365/33 days)
2. Mondelez International Inc. (MDLZ) -- Closed Out Covered Calls Position
3/19/2024 Bought 300 Mondelez shares @ $72.25
3/19/2024 Sold 2 MDLZ 4/5/2024 $71.00 Call options @ $1.65 per share. The Implied Volatility of these Calls was 11.9 when this position was established.
4/5/2024 Call options expired out-of-the-money and the 300 MDLZ shares remain in the Covered Calls Advisor Portfolio.
4/8/2024 Continued this Covered Calls position by selling 3 MDLZ April 19th, 2024 $69.00 Call options against the 300 shares owned.
The overall performance result (including commissions) for this Mondelez position is follows:
Covered Calls Net Investment: $21,182.01
= ($72.25 - $1.65) * 300 shares + $2.01 commission Net Profit Components:
(a) Options Income: +$640.98
= ($1.65 + $.50) * 300 shares - $4.02 commissions
(b) Dividend Income: +$127.50
= $.425 per share x 300 shares
(c) Capital Appreciation (300 MDLZ shares sold at $68.37): -$1,164.00
= ($68.37 -$72.25) * 300 shares
Net Loss: -$395.52
= (+$640.98 options income +$127.50 dividend income - $1,164.00 capital appreciation)
4/19/2024 3 Calls expired out-of-the-money with the stock at $67.56 per share, so the 300 Mondelez shares remained in the Covered Calls Advisor Portfolio.
4/22/2024 Closed out this Mondelez position by selling 300 shares at $68.37.
Covered Calls Net Investment: $21,182.01
= ($72.25 - $1.65) * 300 shares + $2.01 commission Net Profit Components:
(a) Options Income: +$640.98
= ($1.65 + $.50) * 300 shares - $4.02 commissions
(b) Dividend Income: +$127.50
= $.425 per share x 300 shares
(c) Capital Appreciation (300 MDLZ shares sold at $68.37): -$1,164.00
= ($68.37 -$72.25) * 300 shares
Net Loss: -$395.52
= (+$640.98 options income +$127.50 dividend income - $1,164.00 capital appreciation)
Absolute Return-on-Investment: -1.9%
= -$395.52/$21,182.01
Annualized Return-on-Investment: -20.0%
= (-$395.52/$21,182.01) * (365/34 days)
3. Halozyme Therapeutics Inc. (HALO) -- Closed Out Covered Calls Position
The net debit buy/write limit order was executed as follows:
3/13/2024 Bought 400 shares of Halozyme Therapeutics stock @ $41.54 per share.
3/13/2024 Sold 4 HALO April 19th, 2024 $40.00 Call options @ $2.86 per share. Note: the Implied Volatility of the Calls was 35.2 when this position was established.
The overall performance results (including commissions) for this position is as follows:
Halozyme Covered Calls Net Investment: $15,474.68
= ($41.54 - $2.86) * 400 shares + $2.68 commission
3/13/2024 Sold 4 HALO April 19th, 2024 $40.00 Call options @ $2.86 per share. Note: the Implied Volatility of the Calls was 35.2 when this position was established.
4/19/2024 4 Calls expired out-of-the-money with the stock at $38.14 per share, so the 400 Halozyme shares remained in the Covered Calls Advisor Portfolio.
4/22/2024 Closed out this Halozyme position by selling 400 shares at $38.98.
Halozyme Covered Calls Net Investment: $15,474.68
= ($41.54 - $2.86) * 400 shares + $2.68 commission
Net Profit Components:
(a) Options Income: +$1,141.32
= ($2.86 * 400 shares) - $2.68 commission
(b) Dividend Income: +$0.00
(c) Capital Appreciation (400 Halozyme shares sold at $38.98): -$1,024.00
= ($38.98 sales price - $41.54 stock purchase price) * 400 shares
Total Net Profit: +$117.32
= (+$1,141.32 options income + $0.00 dividend income - $1,024.00 capital appreciation)
Absolute Return-on-Investment: +0.8% = +$117.32/$15,474.68
Annualized-Return-on-Investment: +6.9%
= (+$117.32/$15,474.68) * (365/40 days)
The buy/write transaction was:
4/3/2024 Bought 500 Yum China shares @ $39.43.
4/3/2024 Sold 5 Yum China 4/19/2024 $37.50 Call options @ $2.45 per share.
4/19/2024 5 Calls expired out-of-the-money with the stock at $37.12 per share, so the 500 Yum China shares remained in the Covered Calls Advisor Portfolio.
4/22/2024 Closed out this Yum China position by selling 500 shares at $37.02.
Covered Calls Net Investment: $18,493.35
= ($39.43 - $2.45) * 500 shares + $3.35 commission
Net Profit Components:
(a) Options Income: +$1,221.65
= ($2.45 * 500 shares) - $3.35 commission
(b) Dividend Income: +$0.00
(c) Capital Appreciation (500 Yum China shares sold at $37.02): -$1,205.00
+($37.02 sales price - $39.43 stock purchase price) * 500 shares Total Net Profit: +$16.65
= (+$1,221.65 options income +$0.00 dividend income -$1,205.00 capital appreciation)
Absolute Return-on-Investment: +0.1%
= +$16.65/$18,493.35
Annualized Return-on-Investment: +1.7%
= (+$16.65/$18,493.35) * (365/19 days)
