Last Friday, the Covered Calls positions in KraneShares CSI China Internet ETF (ticker KWEB), Lear Corporation (ticker LEA), and Schlumberger (now both new name and ticker are SLB) closed out-of-the-money. So, the Calls expired and shares remained in the Covered Calls Advisor Portfolio. This morning, I decided to continue these Covered Calls positions by selling Call options to roll out to the June 19th, 2024 monthly options expiration dates for KWEB and Lear and to the June 12th, 2024 weekly expiration for SLB. The transactions-to-date for these positions as well as the potential return-on-investment results if these positions are assigned on their respective expiration dates are as follows:
1. KraneShares CSI China Internet ETF (KWEB) -- Continuation of Covered Calls Position
The Buy/Write transaction was as follows:
5/20/2024 Bought 1,000 shares of CSI China Internet ETF @ $31.90 per share.
5/20/2024 Sold 10 KWEB June 21st, 2024 $30.00 Call options @ $2.44 per share. The Implied Volatility of the Calls was 31.2 when this position was established.
6/21/2024 Ten KWEB Calls expired out-of-the-money and the 1,000 KWEB shares remain in the Covered Calls Advisor Portfolio.
6/24/2024 Continued this Covered Calls position by selling-to-open 10 KWEB 7/19/2024 $30.00 Call options at $.33 when the KWEB price was $28.60 per share against the 1,000 KWEB shares owned.
A possible overall performance result (including commissions) for this CSI China Internet ETF Covered Calls position if it is in-the-money on its 7/19/2024 options expiration date is as follows:
KWEB Covered Calls Net Investment: $29,466.70
= ($31.90 - $2.44) * 1,000 shares + $6.70 commission
Net Profit:
(a) Options Income: +$2,756.60
= ($2.44 + $.33) * 1,000 shares - $13.40 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If 1,000 CSI China Internet ETF shares assigned at $30.00 strike price at the 7/19/2024 options expiration date): -$1,900.00
+($30.00 strike price - $31.90 shares purchase price) * 1,000 shares
Total Net Profit Potential (If 1,000 CSI China Internet ETF shares assigned at $30.00 strike price at expiration): +$856.60
= (+$2,756.60 options income + $0.00 dividend income - $1,900.00 capital appreciation)
Potential Absolute Return-on-Investment: +2.9%
= +$856.60/$29,466.70
Potential Annualized Return-on-Investment: +17.7%
= (+$856.60/$29,466.70) * (365/60 days)
The buy/write transaction was:
5/23/2024 Bought 200 Lear Corporation shares @ $123.92.
5/23/2024 Sold 2 LEA 6/21/2024 $120.00 Call options @ $5.20 per share.
6/6/2024 Ex-dividend of $.77 per share.
6/19/2024 2 Lear Calls expired out-of-the-money and the 200 Lear Corp. shares remain in the Covered Calls Advisor Portfolio.
6/24/2024 Continued this Covered Calls position by selling-to-open 2 Lear 7/19/2024 $120.00 Call options at $2.45 when the stock price was $118.34 per share against the 200 Lear shares owned.
A possible overall performance result (including commission) for this Covered Calls position if it is in-the-money on its 7/19/2024 options expiration date is as follows:
Covered Calls Net Investment: $23,745.34
= ($123.92 - $5.20) * 200 shares + $1.34 commission
Net Profit Components:
(a) Options Income: +$1,527.32
= ($5.20 + $2.45) * 200 shares - $2.68 commissions
(b) Dividend Income: $154.00
= ($.77 per share x 200 shares)
(c) Capital Appreciation (If shares assigned at $120.00 strike price at the 7/19/2024 options expiration date): -$784.00
+($120.00 strike price - $123.92 stock purchase price) * 200 shares
Total Net Profit (If stock shares assigned at $120.00 strike price at the 7/19/2024 options expiration date): +$897.32
= (+$1,527.32 options income +$154.00 dividend income -$784.00 capital appreciation)
Potential Absolute Return-on-Investment: +3.8%
= +$897.32/$23,745.34
Potential Annualized Return-on-Investment: +24.2%
= (+$897.32/$23,745.34) * (365/57 days)
3. Schlumberger Ltd. (SLB) -- Continuation of Covered Calls PositionThe buy/write transaction was:
3/26/2024 Bought 300 shares of SLB stock @ $54.08 per share.
3/26/2024 Sold 3 SLB April 19th, 2024 $52.50 Call options @ $2.48 per share. Note: the Implied Volatility of the Calls was 26.3 when this position was established.
4/19/2024 300 SLB shares closed out-of-the-money so 3 Calls expired and 300 SLB shares remain in the Covered Calls Advisor Portfolio.
4/23/2024 Continued Covered Calls position by selling 3 SLB 5/3/2024 Call options at the $50.00 strike price for $.76 per share when the stock price was $49.65.
5/3/2024 Three SLB Calls closed out-of-the-money at $47.77 on their options expiration date, so the Call expired and 300 SLB shares remain in the Covered Calls Advisor Portfolio.
5/6/2024 This SLB Covered Calls position was continued by selling 3 May 17th, 2024 $50.00 Calls at $.27 per share when the stock was trading at $48.25.
5/17/2024 Rolled out the 3 SLB 5/17/2024 $50.00 Calls to 3 6/21/2024 $50.00 Calls at a net credit of $.67 per share.
6/5/2024 Upcoming ex-dividend of $.275 per share.
6/19/2024 Three SLB Calls expired out-of-the-money and the 300 SLB shares remain in the Covered Calls Advisor Portfolio.
6/24/2024 Continued this Covered Calls position by selling-to-open 3 SLB 7/12/2024 $48.00 Call options at $.48 when the stock price was $46.76 per share against the 300 SLB shares owned.
A possible overall performance result (including commissions) for this position if it is in-the-money on its 7/12/2024 options expiration date is as follows:
Covered Calls Net Investment: $15,482.01
= ($54.08 - $2.48) * 300 shares + $2.01 commission
Net Profit Components:
(a) Options Income: +$1,393.95
= ($2.48 + $.76 + $.27 -$.01 + $.70 + $.48) * 300 shares - $10.05 commissions
(b) Dividend Income: +$82.50
= $.275 per share x 300 shares
(c) Capital Appreciation (If SLB stock is above the $48.00 strike price at the July 12th, 2024 options expiration date): -$1,824.00
= ($48.00 strike price - $54.08 stock purchase price) * 300 shares
Potential Total Net Profit (If SLB is in-the-money and therefore assigned at expiration): -$347.55
= (+$1,393.95 options income + $82.50 dividend income - $1,824.00 capital appreciation)
Potential Absolute Return-on-Investment: -2.2% = -$347.55/$15,482.01
Potential Equivalent Annualized-Return-on-Investment: -7.6%
= (-$347.55/$15,482.01 * (365/108 days)
Jeff Partlow (The Covered Calls Advisor)
partlow@cox.net
