Continuation of Covered Calls Position in KraneShares CSI China Internet ETF

Last Friday, the Covered Calls positions in KraneShares CSI China Internet ETF (ticker KWEB) closed out-of-the-money. So, the Calls expired and shares remained in the Covered Calls Advisor Portfolio.  This morning, I decided to continue this Covered Calls position by selling Call options to roll out two weeks to the August 2nd, 2024 weekly options expiration date. The transactions-to-date as well as the potential return-on-investment results if this position is assigned on the options expiration date is as follows:

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.

7/19/2024 Ten KWEB Calls expired out-of-the-money and the 1,000 KWEB shares remain in the Covered Calls Advisor Portfolio.

7/22/2024 Continued this Covered Calls position by selling-to-open 10 KWEB 8/2/2024 $29.00 Call options at $.17 when the KWEB price was $27.70 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 8/2/2024 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 + $.17) * 1,000 shares - $20.10 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If 1,000 CSI China Internet ETF shares assigned at $29.00 strike price at the 8/2/2024 options expiration date): -$2,900.00
+($29.00 strike price - $31.90 shares purchase price) * 1,000 shares

Total Net Profit Potential (If 1,000 CSI China Internet ETF shares assigned at the $29.00 strike price at expiration): - $143.40
= (+$2,756.60 options income + $0.00 dividend income - $2,900.00 capital appreciation)

Potential Absolute Return-on-Investment: -0.5%
= -$143.40/$29,466.70
Potential Annualized Return-on-Investment: -2.4%
= (-$143.40/$29,466.70) * (365/74 days)

Covered Calls Position Closed in The Walt Disney Company

Last Friday, the Covered Calls position in The Walt Disney Company (ticker DIS) closed out-of-the-money at $95.74 which was below its $100.00 strike price.  Today I decided to close out this position by selling the 200 shares. The transactions history for this Disney Covered Calls position and its associated return-on-investment results are detailed below.

The Walt Disney Company (DIS) -- Covered Calls Position Closed by Decision

The buy/write transaction was:
7/2/2024 Bought 200 The Walt Disney Company shares @ $97.58
7/2/2024 Sold 2 DIS 7/19/2024 $100.00 Call options @ $1.03 per share.
7/8/2024 Ex-dividend of $.45 per share.

7/19/2024 Two Disney Call options expired out-of-the-money at $95.74 per share and the 200 Disney shares remain in the Covered Calls Advisor Portfolio.

7/22/2024 Closed out this Disney Covered Calls position by selling the 200 remaining shares at $94.42. 

The overall performance results (including commissions) for this Disney Covered Calls position are as follows:
Covered Calls Net Investment: $19,311.34
= ($97.58 - $1.03) * 200 shares + $1.34 commission

Net Profit:
(a) Options Income: +$204.66
= ($1.03 * 200 shares) - $1.34 commission
(b) Dividend Income:  +$90.00
= ($.45 dividends per share x 200 shares)
(c) Capital Appreciation (DIS stock sold at $94.42): -$632.00
+($94.42 selling price - $97.58 stock purchase price) * 200 shares

Total Net Profit: -$337.34

= (+$204.66 options income +$90.00 dividend income -$632.00 capital appreciation)

Absolute Return-on-Investment: -1.7%

= (-$337.34/$19,311.34)

Equivalent Annualized Return-on-Investment: -31.9%

= (-$337.34/$19,311.34) * (365/20 days)

Covered Calls Position Closed in Lear Corporation

Last Friday, the Covered Calls position in Lear Corporation (ticker LEA) closed out-of-the-money at $118.19 which was below its $120.00 strike price.  This morning, when Lear's stock price had increased to $119.20 and also because it has an upcoming quarterly earnings report this week on Thursday (and also since I prefer to avoid holding companies because of the stock price volatility on those days), I decided to close out this position by selling the 200 shares. The transactions history for this Lear Corp. Covered Calls position and its associated return-on-investment results are detailed below.

Lear Corporation (LEA) -- Covered Calls Position Closed Out by Decision
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.

7/19/2024 Two Lear Call options expired out-of-the-money at $118.19 per share and the 200 Lear shares remain in the Covered Calls Advisor Portfolio.

7/22/2024 Closed out this Lear Corp. Covered Calls position by selling the 200 remaining shares at $119.20. 

The overall performance result (including commission) for this Covered Calls position 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 (Lear shares sold at $119.20): -$944.00
+($119.20 stock selling price - $123.92 stock purchase price) * 200 shares

Total Net Profit: +$737.32

= (+$1,527.32 options income +$154.00 dividend income -$944.00 capital appreciation)

Absolute Return-on-Investment: +3.1%

= +$737.32/$23,745.34

Annualized Return-on-Investment: +18.9%

= (+$737.32/$23,745.34) * (365/60 days)

Monthly Options Expiration Results through July 19th, 2024

Each month after the monthly options expiration date, this summary report provides the results on all positions that have been closed out during the past month (i.e. since the prior month's options expiration date). So this post covers the period from the day after last month's June 21st, 2024 options expiration through last Friday's July 19th, 2024 monthly options expiration date.  

During this past month, the Covered Calls Advisor Portfolio held a total of eight positions that were closed out.  Six positions were closed out at a profit and two positions were closed at a loss.   

The specific results for each position are summarized as follows: 

• One Covered Calls position expired in-the-money (stock price above the strike price) on last Friday's July 19th, 2024 monthly options expiration date as follows: 

1. CBOE Capital Markets Inc. -- +2.3% absolute return-on-investment in 65 days (equivalent to a +12.9% annualized return-on-investment).

• One Covered Calls position expired in-the-money on its weekly options expiration date during the past month as follows:

1. UnitedHealth Group Inc. -- +1.1% absolute return-on-investment in 16 days (equivalent to a +25.0% annualized return-on-investment).

• Two Covered Calls positions were closed out by early assignment on the last trading day prior to their ex-dividend dates as follows: 

1. Mondelez International -- +0.7% absolute return-on-investment in 10 days (equivalent to a +23.9% annualized return-on-investment).
2. U.S. Bancorp -- +1.2% absolute return-on-investment in 9 days (equivalent to a +46.8% annualized return-on-investment).

• Four Covered Calls positions were closed out by early decision as follows:

1. Las Vegas Sands Corporation -- +0.7% absolute return-on-investment in 20 days (equivalent to a +13.5% annualized return-on-investment).
2. Molson Coors Brewing -- -5.5% absolute return-on-investment in 35 days (equivalent to a -57.7% annualized return-on-investment).
3. Schlumberger Ltd.-- -2.0% absolute return-on-investment in 111 days (equivalent to a -6.6% annualized return-on-investment).
4. Target Corporation -- +3.4% absolute return-on-investment in 48 days (equivalent to a +26.0% annualized return-on-investment).

During the past year (last 12 months) 97 of 114 positions (85.1%) in the Covered Calls Advisor Portfolio (CCAP) were closed out at a profit.  The Covered Calls Advisor Portfolio weighted average annualized-return-on-investment was +7.1% during the past year and the average holding period for these 114 closed positions was 23.2 days.  

This Covered Calls Advisor blog is available to anyone interested in learning about implementing a successful Covered Calls investing strategy.  As always, I also encourage you to email me at partlow@cox.net any time you would like my feedback on your Covered Call position ideas or your questions on anything related to the Covered Calls investing strategy.

 

Best Wishes,

Jeff Partlow
Covered Calls Advisor
partlow@cox.net