Early Assignment of Covered Calls Position in Gap Inc.

This morning my broker (Schwab) emailed me that six Gap Inc. (ticker GAP) October 9th, 2026 Call options were exercised early.  Gap's stock price increased from $21.23 when this position was established to $23.79 at yesterday's market close.  The original $.30 time value in the Call options when the position was established had declined to $0.06 at yesterday's market close. So, with 2 days remaining until the 10/9/2026 options expiration date, the owner of these Calls exercised their option to buy the 600 shares at the $20.50 strike price in order to receive today's $.175 per share ex-dividend.  

The post when this Gap Inc. Covered Calls position was originally established is here.  

As detailed below, the return-on-investment result for this Gap Inc. Covered Calls position was +1.5% absolute return in 13 days (equivalent to a +40.8% annualized return-on-investment).

Gap Inc. (GAP) -- Covered Calls Position Closed by Early Assignment
The buy/write transaction was:

9/24/2025 Bought 600 Gap Inc. shares @ $21.23
9/24/2025 Sold 6 Gap 10/9/2026 $20.50 Call options @ $1.03
Note: the Implied Volatility of the Call options was 35.4 when this buy/write transaction was executed.
10/7/2026 Early Assignment of these six Gap Call options, so the Calls expired and 600 Gap shares were sold at the $20.50 strike price.

The overall performance results (including commissions) for this Gap Covered Calls position are as follows:
Covered Calls Net Investment: $12,124.02

= ($21.23 - $1.03) * 600 shares + $4.02 commission

Net Profit Components:
(a) Options Income: +$613.98
= ($1.03 * 600 shares) - $4.02 commission

(b) Dividend Income (Six Call options exercised early on October 6th, the last business day prior to the Oct. 7th, 2026 ex-div date): +$0.00
(c) Capital Appreciation (Gap Call options assigned early): -$438.00
+($20.50 strike price - $21.23 stock purchase price) * 600 shares

Total Net Profit [Six Call options exercised early]: +$175.98

= (+$613.98 options income + $0.00 dividend income - $438.00 capital appreciation)

Absolute Return-on-Investment: +1.5%

= +$175.98/$12,124.02

Annualized Return-on-Investment: +40.8%

= (+$175.98/$12,124.02) * (365/13 days)