Early Assignment of AT&T Inc. Covered Calls Position

This morning, the Covered Calls Advisor received notification from my broker (Schwab) that the 5 AT&T Inc. (ticker symbol T) January 18th, 2019 Call options were exercised early, so the 500 shares of AT&T stock in the Covered Calls Advisor Portfolio were assigned (i.e. sold) at the $28.00 strike price. 

AT&T stock was $30.77 at yesterday's market close.  Early exercise by the owners of these Call options was expected since there was less than $.05 time value remaining in these Call options.  So, the Call owners were willing to immediately forego the remaining small time value per share (by exercising their option to buy the shares) in order to capture today's $.51 per share ex-dividend.  The per share stock price had increased from $28.54 at the end of 2018 to $30.77 at yesterday's market close.  Also as shown below, the Call options were at $.32 at the end of 2018.

As detailed below, the actual return-on-investment result achieved for this Las Vegas Sands position a +1.1% absolute return (equivalent to +51.1% annualized return) for the 8 days this position was held.  The Covered Calls Advisor will retain the cash received in the Covered Calls Advisor Portfolio until a new Covered Calls position is established, the transactions details of which will be posted on this blog site the same day they occur.

AT&T Inc. (T) -- New Covered Calls Position
12/31/2018 End-of-Year market value of 500 AT&T shares  was $28.54 per share.
12/31/2018 End-of-Year market value of 5 January 18, 2019 $28.00 AT&T Call options was $.86 each.
01/08/2019 Early assignment of 5 Call options, so 500 shares of AT&T sold at $28.00 strike price.

The overall performance result (including commissions) during calendar year 2019 for this AT&T Covered Calls position was as follows:
Covered Calls Cost Basis: $13,840.00
= ($28.54 - $.86) *500

Net Profit Components:
(a) Options Income: +$430.00
= ($.86*500 shares)
(b) Dividend Income: +$0.00 since position assigned early (i.e. day prior to 1/9/2019 ex-dividend date for AT&T

(c) Capital Appreciation (T shares assigned at $28.00 strike price at options expiration): -$274.95
+($28.00-$28.54)*500 shares - $4.95 commissions

Total Net Profit: +$155.05

= (+$430.00 Call options income +$0.00 dividend income -$274.95 capital appreciation)

Absolute Return: +1.1%

= +$155.05/$13,840.00

Annualized Return: +51.1%

= (+$164.95/$13,840.00)*(365/8 days)

Covered Calls Continued for Five Remaining Positions

For the five remaining long stock positions in the Covered Calls Advisor Portfolio since the January 1st beginning of this new year, Covered Calls positions were continued today by selling Call options against the stock positions held as follows:
1. January 1, 2019 200 Alibaba Group Holdings Ltd. (Position #1) shares market value was $137.07
    January 7, 2019 Sold 2 BABA January 18, 2019 $145.00 Call options @ $2.09
    Note: Price of BABA stock was $140.48 today when these Call options were sold
2. January 1, 2019 200 Alibaba (Position #2) shares market value was $137.07
    January 7, 2019 Sold 2 BABA February 15, 2019 $145.00 Call options @ $6.40
    Note: Price of BABA was $140.94 today when these Call options were sold
3. January 1, 2019 300 Blackstone Group L.P. shares market value was $29.81
    January 7, 2019 Sold 3 BX February 15, 2019 $33.00 Call options @ $.58
    Note: Price of BX shares was $31.06 today when these Call options were sold
4. January 1, 2019 200 Lam Research Corp. shares market value was $136.17
    January 7, 2019 Sold 2 LRCX February 15, 2019 $145.00 Call options @ $5.35
    Note: Price of LRCX stock was $139.18 today when these Call options were sold
5. January 1, 2019 200 Occidental Petroleum Corp. shares market value was $61.38
    January 7, 2019 Sold 2 January 18, 2019 $65.00 Call options @ $.97
    Note: Price of OXY was $63.81 today when these Call options were sold


Since calendar year 2018 results included the market value of all 14 current Covered Calls Advisor Portfolio positions (listed in right sidebar of this blog) at the end of December, those same market values are also used as the starting point for the 5 positions listed above for which Covered Call positions were established today.  This is done so that 2019 results can be calculated correctly from the January 1st, 2019 beginning of this new year. 

Covered Calls positions (with January and February monthlies) are now held for all 14 stocks currently owned in the Covered Calls Advisor Portfolio (see right sidebar for the Current Portfolio).
As always, any changes to the Portfolio will be posted on this blog on the same day the transactions occur.  

Covered Calls Continued for Six Existing Positions

Today, the following six Covered Calls positions were continued, all with January 18th, 2019 Call options expirations:
1. January 1, 2019 100 Alphabet Inc. shares market value was $1,044.96
    January 4, 2019 Sold 1 GOOGL January 18, 2019 $1,085.00 Call option @ $19.80
    Note: Price of GOOGL was $1,072.44 today when this Call option was sold
2. January 1, 2019 300 Anadarko Petroleum Corporation shares market value was $43.84
    January 4, 2019 Sold 3 APC January 18, 2019 $47.50 Call options @ $1.14
    Note: Price of APC was $46.36 today when these Call options were sold
3. January 1, 2019 1,000 Bank of America Corp. shares market value was $24.64
    January 4, 2019 Sold 10 BAC January 18, 2019 $26.00 Call options @ $.46
    Note: Price of BAC shares was $25.51 today when these Call options were sold
4. January 1, 2019 200 Fluor Corp. shares market value was $32.20
    January 4, 2019 Sold 2 FLR January 18, 2019 $35.00 Call options @ $.65
    Note: Price of FLR stock was $33.96 today when these Call options were sold
5. January 1, 2019 200 JPMorgan Chase & Co. (Position #1 of 2 positions) price was $97.62
    January 4, 2019 Sold 2 January 18, 2019 $100.00 Call options @ $2.52
    Note: Price of JPM was $100.08 today when these Call options were sold
6. January 1, 2019 400 U.S. Steel shares market value per share was $18.24
    January 4, 2019 Sold 4 January 18, 2019 $22.00 Call options @ $.22
    Note: Price of U.S. Steel stock (ticker X) was $20.29 today when these Call options were sold


Since calendar year 2018 results included the market value of all 14 current Covered Calls Advisor Portfolio positions (listed in right sidebar of this blog) at the end of December, those same market values are used as the starting point for all 6 positions listed above for which Covered Call positions were established today.  This is done so that 2019 results can be calculated correctly from the January 1st, 2019 start of this new year.     

Calendar Year 2018 Results

2018 was a very good year for the Covered Calls Advisor Portfolio.  Forty-six of fifty-four total positions held this year (85.2%) were profitable.  This result includes the fourteen currently open positions (shown in the right sidebar of this blog) and their market values as of Dec. 31st, 2018.  This exceeds the Covered Calls Advisor's overall long-term goal of having at least two-thirds (67%) of positions closed out at a profit.   

The average annualized return-on-investment for the fifty-four positions was +23.1%, a very strong result given that the S&P 500 index was -6.24% in 2018.  Note: the average holding period for these 54 positions was 37 days.

For calendar year 2019, detailed records will be tracked so that annualized returns will be weighted based on the holding period for each position.