Update on Three Covered Calls that Expired Out-of-the-Money Last Friday

The Covered Calls Advisor Portfolio had three Covered Call positions where the expiration date of the Calls was last Friday (December 13th).  The three positions were in Bank of America Corporation, Fedex Corporation, and Schlumberger (SLB), and all three Calls expired out-of-the-money with the stock prices below their respective strike prices.  This morning, my decisions regarding the stock of each company was as follows: 

(1) Bank of America -- the stock closed last Friday at $45.67 which was below the $46.50 strike price.  I have not made a decision yet on how to proceed with the 200 BAC shares in this position but will do so sometime this week and will make a post updating my actions on the same day the transaction occurs.  

(2) Fedex Corporation -- the stock closed at $283.42 which was well below the $290.00 strike price.  A significant factor in the decline was the research report of Morgan Stanley in which they stated that they were seeing "continued volume/price/mix headwinds exacerbated by rolloff of USPS revenues, compressed peak season, and slowing DRIVE gains."  In addition, Fedex's next quarterly report is this Thursday and since my preference is to avoid holding positions through earnings reports, I decided to sell the 100 shares this morning when the stock was at $284.95.  Detailed results for this position are provided below.  

(3) Schlumberger Ltd. (SLB) -- the stock closed last Friday at $40.22 which was below the $42.00 strike price.  This morning I decided to continue this Covered Calls position for another two weeks by selling four Dec. 27th $41.50 Calls for $.50 per share when the stock was at $40.72.  Potential results for this position are detailed below.

     

Fedex Corporation (FDX) -- Closed Out Covered Call Position 

The buy/write transaction was:
12/2/2024 Bought 100 Fedex shares @ $296.04.
12/2/2024 Sold 1 FDX 12/13/2024 $290.00 Call option @ $7.94 per share.
Note: Implied Volatility (IV) of the Call options was at 14.7 when this position was transacted which, as I prefer, is above the current VIX of 13.4.   
12/9/2024 Quarterly ex-dividend of $1.38 per share. 

12/13/2024 FDX Call option expired out-of-the-money and the 100 FDX shares remain in the Covered Calls Advisor Portfolio.

12/16/2024 Sold 100 FDX shares at $284.95 per share.

The overall performance results (including commissions) for this Fedex Corp. Covered Calls position were as follows:
Covered Calls Net Investment: $28,810.67
= ($296.04 - $7.94) * 100 shares + $.67 commission

Net Profit Components:
(a) Options Income: +$793.33
= ($7.94 * 100 shares) - $.67 commission
(b) Dividend Income: +$138.00
= ($1.38 dividends per share x 100 shares)

(c) Capital Appreciation (Fedex shares sold at $284.95): -$1,109.00

+($284.95 stock sales price - $296.04 stock purchase price) * 100 shares

Total Net Loss: -$327.33

= (+$793.33 options income +$138.00 dividend income - $1,109.00 capital appreciation)

Absolute Return-on-Investment: -0.6%

= -$177.67/$28,810.67

Annualized Return-on-Investment: -16.1%

= (-$177.67/$28,810.67) * (365/14 days)

Schlumberger Ltd. (SLB) -- Rollout of Covered Calls Position

The buy/write transaction was:
12/2/2024 Bought 400 SLB shares @ $43.22.
12/2/2024 Sold 4 USB 12/13/2024 $42.00 Call options @ $1.48 per share.
12/4/2024 Quarterly ex-dividend of $.275 per share. 

12/13/2024 Four SLB Call options expired out-of-the-money so the 400 SLB shares remain in the Covered Calls Advisor Portfolio.

12/16/2024 Continued this SLB Covered Calls position by selling 4 SLB December 27th, 2024 $41.50 Calls at $.50 per share when SLB's stock price was $40.72 per share.

Two possible overall performance results (including commissions) for this SLB Covered Calls position are as follows:
Covered Calls Net Investment: $16,698.68
= ($43.22 - $1.48) * 400 shares + $2.68 commission

Net Profit Components:
(a) Options Income: +$786.64
= ($1.48 + $.50) x 400 shares - $5.36 commissions
(b) Dividend Income: +$110.00
= ($.275 dividends per share x 400 shares)

(c) Capital Appreciation (If SLB's stock price unchanged at $40.72 on the December 27th options expiration date): -$1,000.00

+($40.72 static stock price - $43.22 stock purchase price) * 400 shares; or
(c) Capital Appreciation (If shares assigned at $41.50 strike price on the 12/27/2024 options expiration): -$688.00
+($41.50 strike price - $43.22 SLB stock purchase price) * 400 shares

1. Total Net Profit (If stock price unchanged at $40.72 on the 12/27/2024 options expiration date): -$103.36

= (+$786.64 options income +$110.00 dividend income - $1,000.00 capital appreciation); or

2. Total Net Profit (If 400 SLB shares assigned at the $41.50 strike price at the Dec. 27th, 2024 expiration): +$208.64

= (+$786.64 options income + $110.00 dividend income - $688.00 capital appreciation)

1. Potential Absolute Return-on-Investment [If stock price unchanged at $40.72 on the 12/27/2024 options expiration date): -0.6%

= -$103.36/$16,698.68

Potential Annualized Return-on-Investment (If option exercised early): -9.0%

= (-$103.36/$16,698.68) * (365/25 days); or

2. Potential Absolute Return-on-Investment (If SLB's shares assigned on the Dec. 13th options expiration date): +1.2%

= +$211.32/$16,698.68

Potential Annualized Return-on-Investment (If 400 SLB shares assigned at the $41.50 strike price at the Dec. 27th, 2024 expiration): +18.2%

= (+$208.64/$16,698.68) * (365/25 days)