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Monday, March 18, 2024

Continuation of Covered Calls Position in Match Group Inc.

The Covered Calls Advisor Portfolio has a Covered Calls position in Match Group Inc. (ticker MTCH) which expired with the stock at $33.55 which was below the $35.00 strike price at last Friday's options expiration.  Today this position was continued by rolling out to the March 28th, 2024 weekly options expiration at the $34.50 strike price by selling-to-open three Calls at $.81 per share when the price of Match Group stock had increased to $34.76.  

As detailed below, a potential outcome for this Match Group investment if the stock is in-the-money and therefore assigned on the options expiration date is +2.9% absolute return-on-investment over 29 days (equivalent to +36.6% annualized-return-on-investment) if the stock closes above the $34.50 strike price on the March 28th, 2024 options expiration date.  The transactions history of this Match Group Covered Calls position to-date along with a potential return-on-investment result if the stock is assigned on the March 28th, 2024 options expiration date is as follows:


Match Group Inc. (MTCH) -- Continuation of Covered Calls Position

The buy/write transaction was:
2/28/2024 Bought 600 Match Group Inc. shares @ $36.49.
2/28/2024 Sold 6 MTCH 3/15/2024 $35.00 Call options @ $2.19 per share.
3/15/2024 Match Group stock price was below the $35.00 strike price, so the Calls expired and the 600 MTCH shares remained in the Covered Calls Advisor Portfolio. 
3/18/2024 Continued this Match Group Covered Calls position by selling six March 28th, 2024 $34.50 Call options @ $.81 per share when the stock was trading today at $34.76.  The Implied Volatility of these Calls was 40.6 and the Delta was 39.3 when this transaction was executed.

A possible overall performance result (including commissions) for this Match Group Covered Calls position if assigned on its 3/28/2024 options expiration date is as follows:
Match Group Covered Calls Net Investment: $20,584.02
= ($36.49 - $2.19) * 600 shares + $4.02 commission

Net Profit:
(a) Options Income: +$1,791.96
= ($2.19 + $.81) * 600 shares - $8.04 commission
(b) Dividend Income: +$0.00
= ($0.00 dividends per share x 600 shares)
(c) Capital Appreciation (If MTCH shares assigned at $34.50 strike price at expiration): -$1,194.00
+($34.50 strike price - $36.49 stock purchase price) * 600 shares

Total Net Profit (If options exercised on the 3/28/2024 options expiration date): +$597.96
= (+$1,791.96 options income +$0.00 dividend income -$1,194.00 capital appreciation)

Potential Absolute Return-on-Investment (If the Match Group Inc. shares are assigned at the $34.50 strike price at the March 28th, 2024 options expiration date): +2.9%
= +$597.96/$20,584.02
Potential Annualized Return-on-Investment (If 600 Match Group shares assigned at $34.50 at the 3/28/2024 options expiration date): +36.6%
= (+$597.96/$20,584.02) * (365/29 days)

Saturday, March 16, 2024

Monthly Options Expiration Results through March 15th, 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 February 16th, 2024 options expiration through yesterday's March 15th, 2024 monthly options expiration date.  

During this past month, the Covered Calls Advisor Portfolio closed a total of twelve positions.  Fortunately, all twelve positions were closed out at a profit.  In addition, one Covered Calls position expired out-of-the-money on yesterday's monthly options expiration date (so those shares currently remain in the Covered Calls Advisor Portfolio).   

The specific results for each position are summarized as follows: 

  • Four Covered Calls positions were closed out when their Call options expired in-the-money (stock price above the strike price) on yesterday's March 15th, 2024 monthly options expiration date as follows:
  1. Yum China Holdings Inc. -- +1.4% absolute return-on-investment in 18 days (equivalent to a +29.4% annualized return-on-investment). 
  2. Becton Dickinson & Company -- +1.0% absolute return-on-investment in 10 days (equivalent to a +38.1% annualized return-on-investment). 
  3. Schlumberger Ltd. -- +2.8% absolute return-on-investment in 46 days (equivalent to a +21.8% annualized return-on-investment).
  4. Aptiv PLC -- +1.1% absolute return-on-investment in 11 days (equivalent to a +36.4% annualized return-on-investment).

  • Two Covered Calls positions were closed out by early decision as follows:
  1. Oshkosh Corporation -- +0.1% absolute return-on-investment in 13 days (equivalent to a +0.3% annualized return-on-investment).
  2. Newmont Corporation -- +1.7% absolute return-on-investment in 12 days (equivalent to a +49.2% annualized return-on-investment).

  • Three Covered Calls positions were closed out by early assignment when the Call owners decided to exercise their right to close out their options prior to these companies' ex-dividend date.  So, the three Covered Calls positions were closed out. The Calls expired and the shares were sold at their respective strike prices with the following results: 
  1. Genuine Parts Company -- +0.9% absolute return-on-investment in 8 days (equivalent to a +40.5% annualized return-on-investment).
  2. Newmont Corporation -- +0.9% absolute return-on-investment in 5 days (equivalent to a +68.1% annualized return-on-investment).
  3. FedEx Corporation -- +1.1% absolute return-on-investment in 14 days (equivalent to a +28.8% annualized return-on-investment).

      • Three Covered Calls positions were closed out in-the-money on their weekly options expiration dates during the past month as follows:
      1. Delta Air Lines Inc. -- +1.2% absolute return-on-investment in 15 days (equivalent to a +29.4% annualized return-on-investment).
      2. KraneShares CSI China Internet ETF -- +6.4% absolute return-on-investment in 57 days (equivalent to a +41.1% annualized return-on-investment).
      3. Target Corporation -- +1.6% absolute return-on-investment in 14 days (equivalent to a +40.6% annualized return-on-investment).

      • One Covered Calls position closed out-of-the-money yesterday on its March 15th, 2024 monthly options expiration date, so the Call options expired and the shares now remain in the Covered Calls Advisor Portfolio.  Six hundred shares of Match Group Inc. closed at $33.55 per share which was below its $35.00 strike price.  Early next week, a decision will be made to either close out the position by selling the shares or to continue the Covered Calls positions by selling future Call options against the shares currently held.  As always, the details of all transactions-to-date will be posted on this blog site on the same day the transactions occur.

      During the past year (last 12 months) 119 of 132 positions (90.2%) in the Covered Calls Advisor Portfolio (CCAP) were closed out at a profit.  The Covered Calls Advisor Portfolio weighted average annualized-return-on-investment (aroi) was +14.9% during the past year and the average holding period for these 132 closed positions was 20.1 days.  In comparison, the benchmark S&P 500 has returned +30.2% during the same prior one-year period. 

      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


      Friday, March 15, 2024

      Established Covered Calls Position in KraneShares CSI China Internet ETF

      This afternoon a 3-week Covered Calls position was established in KraneShares CSI China Internet ETF (ticker KWEB). Five hundred shares were purchased at $26.29 and five April 5th, 2024 Call options were sold at the $25.50 strike price at $1.37 per share--a buy/write net debit transaction of $24.92 per share which provides a $.58 per share time value profit potential.  The Delta was 65.7 when this transaction occurred. 

      Wall Street Analysts rate the top 10 positions in KWEB as having +21.5% upside potential from their current prices. From a valuation perspective, KWEB's trailing-twelve-months P/E ratio is only 18.4 which compares very favorably to the market-cap-weighted "magnificent 7" U.S. companies whose P/E is now in the mid 40s.

      As detailed below, a potential result is +2.3% absolute return-on-investment (equivalent to +40.5% annualized return-on-investment for the next 21 days) if the KWEB share price is in-the-money (i.e. above the $25.50 strike price) and therefore assigned on its April 5th, 2024 options expiration date.

       
      KraneShares CSI China Internet ETF (KWEB) -- New Covered Calls Position 

      The Buy/Write transaction was as follows:
      3/15/2024 Bought 500 shares of CSI China Internet ETF @ $26.29 per share.  
      3/15/2024 Sold 5 KWEB April 5th, 2024 $25.50 Call options @ $1.37 per share.  The Implied Volatility of the Calls was 35.2 when this position was established.  

      A possible overall performance result (including commissions) for this CSI China Internet ETF Covered Calls position is as follows: 
      KWEB Covered Calls Net Investment: $12,313.35
      = ($26.29 - $1.37) * 500 shares + $3.35 commission

      Net Profit:
      (a) Options Income: +$681.65
      = ($1.37 * 500 shares) - $3.35 commission
      (b) Dividend Income: +$0.00
      (c) Capital Appreciation (If 500 CSI China Internet ETF shares assigned at $25.50 strike price at expiration): -$395.00
      +($25.50 - $26.29) * 500 shares

      Total Net Profit Potential (If 500 CSI China Internet ETF shares assigned at $25.50 strike price at expiration): +$286.65
      = (+$681.65 options income +$0.00 dividend income - $395.00 capital appreciation)

      Potential Absolute Return-on-Investment: +2.3%
      = +$286.65/$12,313.35
      Potential Annualized Return-on-Investment: +40.5%
      = (+$286.65/$12,313.35) * (365/21 days)

      Thursday, March 14, 2024

      Covered Calls Position Established in Aptiv PLC

      Early this afternoon, my buy/write limit order for Aptiv PLC (ticker APTV) was executed.  My net debit limit price of $72.64 was executed when two hundred shares were purchased at $77.04 and two April 19th, 2024 Call options were sold at $4.40 per share at the $75.00 strike price.  The potential time value profit was $2.36 per share = [$75.00 strike price - ($77.04 stock purchase price - $4.40 Call options price)].   A slightly in-the-money Covered Calls position was established with a Delta of 63.8 which approximates a 63.8% probability this position will be in-the-money and therefore assigned on the April 19th, 2024 options expiration date.  As desired, the next quarterly earnings report on May 2nd is after the Apr 19th options expiration date.

      Aptiv was part of Delphi Automotive until the spin-off of its power systems division in 2017 which became Aptiv PLC (based in Dublin, Ireland).  Aptiv is one of the world's largest vehicle component manufacturers and its customers include all 25 of the leading automotive original equipment manufacturers (OEMs), but with no single company representing more than 10% of revenues.  Their two divisions are Signal and Power Solutions (74%) and Advanced Safety and User Experience (26%).  

      As shown in the detailed chart below, Aptiv meets all 18 filters of my Quality+Value+Growth stock screener and of the 18 companies that met all 18 filters (when my metric weightings were applied), Aptiv was the second highest.  Aptiv also met all the filters in both my Future 5-Year PEG Ratios screener and my Stock Rover Overall stock screener.  Aptiv is also now top-rated by Morningstar (5 stars).

      As detailed below, the potential return-on-investment results for this Aptiv PLC Covered Calls position is +3.2% absolute return (equivalent to +32.8% annualized return-on-investment for the next 36 days) if the stock is assigned on the April 19th, 2024 options expiration date.



      Aptiv PLC (APTV) -- New Covered Calls Position

      The buy/write transaction was:
      3/14/2024 Bought 200 Aptiv PLC shares @ $77.04
      3/14/2024 Sold 2 APTV 4/19/2024 $75.00 Call options @ $4.40 per shareThe Implied Volatility of these Calls was 31.0 when this position was estalished.

      A possible overall performance result (including commissions) for this Aptiv Covered Calls position is as follows:
      Aptiv Covered Calls Net Investment: $14,529.34
      = ($77.04 - $4.40) * 200 shares + $1.34 commission

      Net Profit:
      (a) Options Income: +$878.66
      = ($4.40 * 200 shares) - $1.34 commission
      (b) Dividend Income: +$0.00
      = ($0.00 dividends per share x 200 shares)
      (c) Capital Appreciation (If APTV shares assigned at $75.00 strike price at expiration): -$408.00
      +($75.00 - $77.04) * 200 shares

      Total Net Profit (If options exercised on the 4/19/2024 options expiration date): +$470.66
      = (+$878.66 options income +$0.00 dividend income -$408.00 capital appreciation)

      Potential Absolute Return-on-Investment (If the Aptiv shares are assigned at the $75.00 strike price at the April 19th, 2024 options expiration date): +3.2%
      = +$470.66/$14,529.34
      Potential Annualized Return-on-Investment (If 200 Aptiv PLC shares assigned at $75.00 at the 4/19/2024 options expiration): +32.8%
      = (+$470.66/$14,529.34) * (365/36 days)