Monday, November 20, 2017

Covered Calls Positions Continued in Citigroup Inc. and Freeport-McMoRan Inc.

Last Friday, the November 17th, 2017 Covered Calls positions in Citigroup Inc. (ticker symbol C) and Freeport-McMoRan Inc. (ticker FCX) expired with the stock prices below their strike prices.  So, their Call options expired and their stock shares were retained in the Covered Calls Advisor's Portfolio.  This morning, the Covered Calls Advisor continued both Covered Calls positions by selling December 15th, 2017 Call options against both long stock positions.

Some potential return-on-investment results for each position are:  

  • Citigroup Inc. -- A +2.0% absolute return in 53 days (equivalent to a +13.9% annualized return-on-investment if stock price unchanged at $71.86 at the December 15th expiration; OR a +2.9% absolute return in 53 days (equivalent to a +20.0% annualized return if Citi stock closes above the $72.50 strike price on the December 15th expiration date.
  • Freeport-McMoRan Inc. -- A +6.2% absolute return in 42 days (equivalent to a +53.6% annualized return if FCX stock remains above the $14.00 strike price on the December 15th expiration date.
The transactions to-date and potential return-on-investment results for both positions are detailed below. 

1. Citigroup Inc.(C) -- Covered Calls Position Continued
The transactions to-date are as follows:
10/23/2017 Bought 400 shares of Citigroup stock @ $73.76 per share 
10/23/2017 Sold 4 Citigroup Nov 17th, 2017 $72.50 Call options @ $1.97 per share
Note: this was a simultaneous Buy/Write transaction
11/17/2017 4 Citi Nov. 17th Call options expired and 400 shares of Citi stock were retained in the Covered Calls Advisor Portfolio
Note: the price of Citi stock was $71.33 upon the options expiration.
11/20/2017 Continuation of Citi Covered Calls position by selling 4 Dec 15th, 2017 Call options at the $72.50 strike @ $1.09 per share
Note: Citi stock was at $71.86 when this transaction occurred

Two possible overall performance results (including commissions) would be as follows:
Covered Calls Cost Basis: $28,723.63
= ($73.76 - $1.97)* 400 shares + $7.63 commission

Net Profit Components:
(a) Options Income: +$1,216.37
= ($1.97 + $1.09) * 400 shares -$7.63 commission
(b) Dividend Income: +$128.00
= $.32 per share * 400 shares 
(c) Capital Appreciation (If Citi stock price is unchanged at current $71.86 at Dec 15th expiration): -$764.95
= ($71.86 -$73.76)* 400 shares - $4.95 commission; OR
(c) Capital Appreciation (If Citi stock closes above $72.50 strike price at expiration) : -$508.95
= ($72.50 -$73.76)* 400 shares - $4.95 commission

Two Potential Total Net Profits:
(a) If Citi stock price is unchanged at current $71.86 at Dec 15th expiration: +$579.42
= (+$1,216.37 options income +$128.00 dividend income -$764.95 capital appreciation); OR
(b) If Citi stock price is above $72.50 strike price at Dec 15th expiration) +$835.42
= (+$1,216.37 options income +$128.00 dividend income -$508.95 capital appreciation)

Two Potential Return-on-Investment Results:
(a) If Citi stock price is unchanged at current $71.86 at Dec 15th expiration:
Absolute Return : +2.0%
= +$579.42/$28,723.63
Equivalent Annualized Return: +13.9%
= (+$579.42/$28,723.63)*(365/53 days); OR
(b) If Citi stock price is above $72.50 strike price at Dec 15th expiration:
Absolute Return : +2.9%
= +$835.42/$28,723.63
Equivalent Annualized Return: +20.0%
= (+$835.42/$28,723.63)*(365/53 days)


2. Freeport-McMoRan Inc. (FCX) -- Covered Calls Position Continued
The implied volatility of the Call options was 34.2 when this position was originally established and 33.8 when the Dec 15th Calls were sold today.  There are no ex-dividend dates or earnings reports scheduled prior to the December 15th options expiration date.

The transactions were as follows:
11/03/2017 Bought 1,000 shares of Freeport-McMoRan stock @ $14.11 per share 
11/03/2017 Sold 10 FCX November 17th, 2017 $14.00 Call options @ $.44 per share
Note: this was a simultaneous Buy/Write transaction with excellent options liquidity at 38,263 open interest.
11/17/2017 10 FCX Nov. 17th Call options expired and 1,000 shares of Freeport McMoRan stock were retained in the Covered Calls Advisor Portfolio
Note: the price of FCX stock was $13.86 upon the options expiration.
11/20/2017 Continuation of FCX Covered Calls position by selling 10 Dec 15th, 2017 Call options at the $14.00 strike @ $.53 per share
Note: Freeport-McMoRan stock was at $14.03 when this transaction occurred

A possible overall performance result (including commissions) would be as follows:
Covered Calls Cost Basis: $13,681.65
= ($14.11 - $.44)* 1,000 shares + $11.65 commissions

Net Profit Components:
(a) Options Income: +$958.35
= ($.44 + $.53)* 1,000 shares - $11.65 commission
(b) Dividend Income: +$0.00 
(c) Capital Appreciation (If FCX stock is above $14.00 strike price at Dec 15th expiration): -$114.95
= ($14.00 -$14.11)* 1,000 shares - $4.95 commission

Total Net Profit: +$843.40
= (+$958.35 options income +$0.00 dividend income -$114.95 capital appreciation)

Absolute Return: +6.2%
= +$843.40/$13,681.65
Equivalent Annualized Return: +53.6%
= (+$843.40/$13,681.65)*(365/42 days)

Closed Postion in Wynn Resorts Ltd.

Last Friday, the November 17th, 2017 Covered Calls position in Wynn Resorts Ltd. (ticker symbol WYNN) expired with the stock price at $152.28, below the $152.50 strike price -- so the Call options expired and the 100 shares were retained in the Covered Calls Advisor's Portfolio.  The stock moved higher this morning at the market opening and the position was closed out by selling the 100 shares at $154.71.  As detailed below, this weekly Covered Calls position achieved a return-on-investment result of +2.1% absolute return in 6 days (equivalent to a +130.5% annualized return-on-investment).

Wynn Resorts Ltd. (WYNN) -- New Covered Calls Position
The transactions were as follows:
11/14/2017 Bought 100 shares of Wynn Resorts stock @ $153.90 per share 
11/14/2017 Sold 1 WYNN Nov. 17th, 2017 $152.50 Call option @ $2.00 per share
Note: this was a simultaneous Buy/Write transaction with relatively good options liquidity of 1,754 open interest contracts.  The implied volatility of the Call options was 17.9 when this position was established.
11/17/2017 The WYNN 11/17/2017 $152.50 Call option expired and the 100 shares of stock was retained.  Note: the price of the stock was $152.28 upon the options expiration.
11/20/2017 Sold 100 WYNN shares at $154.71.  

The overall performance result (including commissions) was as follows:
Covered Calls Cost Basis: $15,195.62
= ($153.90 - $2.00)* 100 shares + $5.62 commissions

Net Profit Components:
(a) Options Income: +$200.00
= ($2.00* 100 shares)
(b) Dividend Income: +$50.00
= $.50/share * 100 shares 
(c) Capital Appreciation: -$76.05
= ($154.71 -$153.90)* 100 shares - $4.95 commission

Total Net Profit: +$326.05
= (+$200.00 options income +$50.00 dividend income +$76.05 capital appreciation)

Absolute Return: +2.1%
= +$326.05/$15,195.62
Equivalent Annualized Return: +130.5%
= (+$326.05/$15,195.62)*(365/6 days)

Sunday, November 19, 2017

November 17th, 2017 Option Expiration Results

The Covered Calls Advisor Portfolio had seven positions with November 17th, 2017 options expirations.  As posted this past Friday on this blog, two in-the-money Covered Calls positions (Best Buy Inc. and Devon Energy Corp.) were continued by rolling them out to the December 15th expiration at the same strike price they had for the November 17th expiration.

Of the remaining five positions, two (Alibaba Group Holding Ltd. and CVS Health Corporation) closed in-the-money, so the maximum possible return-on-investment result was achieved.  Details of the transactions and results for each of these positions was:
  • Alibaba Group Holding Ltd.:  +2.2% absolute return (+31.2% annualized return) in 26 days
  • CVS Health Corporation:  +2.4% absolute return (+24.0% annualized return) in 36 days 
The cash now available in the Covered Calls Advisor Portfolio from the closing of these two positions will be retained until new Covered Calls and/or 100% Cash-Secured Puts positions are established.  Any new position(s) established with this available cash will be posted on this site on the same day the transactions occur.  

The remaining three positions (Citigroup Inc., Freeport McMoRan Inc., and Wynn Resorts Ltd.) closed yesterday with their stock price below their strike prices, so those shares will remain in the Covered Calls Advisor Portfolio (see holdings in right sidebar) until they are either sold or a continuation Covered Calls position is established. 

The details for each of the closed positions is as follows:


1. Alibaba Group Holding Ltd. (BABA) -- Covered Calls Position Closed
The implied volatility of the Call options was 39.5 when this position was established.  This is a very high level which in large part is due to the uncertainty associated with the earnings report on Nov 2nd and its annual Singles Day sale on Nov 11th.

The transactions were as follows:
10/23/2017 Bought 300 shares of Alibaba stock @ $174.13 per share 
10/23/2017 Sold 3 Alibaba November 17th, 2017 $165.00 Call options @ $12.73 per share
Note: this was a simultaneous Buy/Write transaction
11/17/2017 3 BABA Call options assigned and 300 shares sold @ $165.00 strike price.
Note: the price of Alibaba stock was $185.13 at options expiration.

The overall performance result (including commissions) was as follows:
Covered Calls Cost Basis: $48,426.96
= ($174.13 - $12.73)* 300 shares + $6.96 commission

Net Profit Components:
(a) Options Income: +$3,819.00
= ($12.73* 300 shares)
(b) Dividend Income: +$0.00 
(c) Capital Appreciation (BABA stock was above $165.00 strike price at Nov 17th expiration): -$2,743.95
= ($165.00 -$174.13)* 300 shares - $4.95 commission

Total Net Profit: +$1,075.05
= (+$3,819.00 options income +$0.00 dividend income -$2,743.95 capital appreciation)

Absolute Return: +2.2%
= +$1,075.05/$48,426.96
Equivalent Annualized Return: +31.2%
= (+$1,075.05/$48,426.96)*(365/26 days)



2. CVS Health Corporation (CVS) -- Covered Calls Position Closed
The transactions were as follows:
10/13/2017 Bought 300 shares of CVS stock @ $72.84 per share 
10/13/2017 Sold 3 CVS Nov 17th, 2017 $70.00 Call options @ $3.99 per share
Note: this was a simultaneous Buy/Write transaction
10/23/2017 Ex-dividend of $150.00
= $.50 per share x 300 shares
11/17/2017 3 CVS Call options assigned and 300 shares sold @ $70.00 strike price.
Note: the price of CVS stock was $70.68 at options expiration.

The overall performance result (including commissions) was as follows:
Covered Calls Cost Basis: $20,661.96
= ($72.84 - $3.99)* 300 shares + $6.96 commission

Net Profit Components:
(a) Options Income: +$1,197.00
= ($3.99 * 300 shares)
(b) Dividend Income: +$150.00
= $.50 per share * 300 shares 
(c) Capital Appreciation (If CVS is above $70.00 strike price at Nov 17th expiration): -$856.95
= ($70.00 -$72.84)* 300 shares - $4.95 commission

Total Net Profit: +$490.05
= (+$1,197.00 options income +$150.00 dividend income -$856.95 capital appreciation)

Absolute Return: +2.4%
= +$490.05/$20,661.96
Equivalent Annualized Return: +24.0%
= (+$490.05/$20,661.96)*(365/36 days)

Friday, November 17, 2017

Established Covered Calls Position in The Coca-Cola Company

Today, a new Covered Calls position was established in The Coca-Cola Company (ticker KO) at the $45.00 strike price and for the December 15th, 2017 options expiration date.

As detailed below, a potential return-on-investment is +1.4% absolute return in 29 days (equivalent to a +17.7% annualized return-on-investment).  This return includes a $.37 per share quarterly ex-dividend on November 30th plus a potential time value (i.e. extrinsic value) profit of $.27 [$.69 options income - ($45.42 stock cost - $45.00 strike price)]. 


The Coca-Cola Company (KO) -- New Covered Calls Position
The transactions were as follows:
11/17/2017 Bought 400 shares of The Coca-Cola Company stock @ $45.42 per share 
11/17/2017 Sold 4 Coca-Cola Dec 15th, 2017 $45.00 Call options @ $.69 per share
Note: this was a simultaneous Buy/Write transaction

A possible overall performance result (including commissions) would be as follows:
Covered Calls Cost Basis: $17,899.63
= ($45.42 - $.69)* 400 shares + $7.63 commission

Net Profit Components:
(a) Options Income: +$276.00
= ($.69* 400 shares)
(b) Dividend Income: +$148.00
= $.37 per share * 400 shares 
(c) Capital Appreciation (If Coca-Cola stock is above $45.00 strike price at Dec 15th expiration): -$172.95
= ($45.00 -$45.42)* 400 shares - $4.95 commission

Total Net Profit: +$251.05
= (+$276.00 options income +$148.00 dividend income -$172.95 capital appreciation)

Absolute Return: +1.4%
= +$251.05/$17,899.63
Equivalent Annualized Return: +17.7%
= (+$251.05/$17,899.63)*(365/29 days)

The downside 'breakeven price' at expiration is at $44.36 ($45.42 stock price - $.69 options income - $.37 dividend income), which is 2.3% below the current market price of $45.42.

Rolled Out Covered Calls Position in Devon Energy Corp.

This afternoon, with today's (i.e. Nov 17th, 2017) $36.00 strike price Covered Calls position in Devon Energy well in-the-money, the Covered Calls Advisor decided continue with this Covered Calls position that was first established six months ago.  The current position was rolled out to the Dec 15th Covered Calls at the identical $36.00 strike price.  This was done with only about $.02 time value remaining in the November Call options and a net credit in the rollout of $.41 per share was achieved ($3.14 income for December Calls sold minus $2.73 debit for Nov. 17th Calls bought-to-close).  Based on the Covered Calls Advisor's current market overall Neutral sentiment, a moderately in-the-money position was established.

As detailed below, a potential return-on-investment result for this Devon Energy position is +12.8% absolute return for 204 days (equivalent to a +22.9% annualized return-on-investment).  


Devon Energy Corp. (DVN) -- Continuation Covered Calls Position
The transactions to-date have been as follows:
05/25/2017  Bought 500 Devon Energy Corp. shares @ $37.45
05/25/2017 Sold 5 DVN June 16, 2017 $36.00 Call options @ $2.10
Note: this was a simultaneous buy/write transaction.
06/13/2017 Ex-dividend of $30.00 ($.06 x 500 shares)
06/16/2017 5 DVN June 16th, 2017 Call options expired
Note: the price of DVN stock closed at $31.76 upon the June 16th options expiration date.
07/03/2017 Sold 5 DVN July 21, 2017 $33.00 Call options @ $.87 per share
07/21/2017 5 DVN Call options expired
07/26/2017 Sold 5 DVN Aug 18, 2017 $35.00 Call options @ $.65 per share
08/18/2017 5 DVN Call options expired
Note: the price of DVN stock was $30.40 upon expiration of the Aug 18th Call options
09/14/2017 Ex-dividend of $30.00 ($.06 x 500 shares)
09/14/2017 Sold 5 DVN October 20th, 2017 $35.00 Call options @ $.89 per share
Note: the price of DVN stock was $34.12 today when the Oct 20th Call options were sold
10/20/2017 5 DVN Call options expired
Note: the price of DVN stock was $34.92 upon expiration of the Oct 20th Call options
10/27/2017 Sold 5 DVN November 17th, 2017 $36.00 Call options @ $.93 per share
Note: the price of DVN stock was $35.66 today when the Nov 17th Call options were sold
11/17/2017 Bought-to-Close 5 DVN Nov 17th $36.00 Call options @ $2.73
11/17/2017 Sold-to-Open 5 DVN Dec 15th, 2017 $36.00 Call options @ $3.14
12/14/2017 Upcoming Ex-Dividend of $.06 per share

A possible overall performance result (including commissions) would be as follows:
Cost Basis of Original Covered Calls Position Established in DVN: $17,679.95
= ($37.45 - $2.10)*500 + $4.95 commission

Net Profit Components:
(a) Options Income: +$2,904.90
= ($2.10 + $.87 + $.65 + $.89 +$.93 -$2.73 +$3.14) *500 shares - 6*$3.35 commissions
(b) Dividend Income: +$90.00
= ($.06 + $.06 + $.06) * 500 shares
(c) Capital Appreciation (If DVN is above $36.00 strike price at the Dec 15th, 2017 expiration): -$729.95
= ($36.00-$37.45)*500 shares - $4.95 commissions

Total Net Profit (If DVN stock is above $36.00 strike price at Dec 15, 2017 options expiration): +$2,264.95
= (+$2,904.90 options income +$90.00 dividends -$729.95 capital appreciation)

Absolute Return: +12.8%
= +$2,264.95/$17,679.95
Annualized Return: +22.9%
= (+$2,264.95/$17,679.95)*(365/204 days)

Rolled Out Covered Calls Position in Best Buy Inc.

This morning, when the price of Best Buy dipped to about $54.30, the Covered Calls Advisor rolled out from today's (i.e. Nov 17th) $52.50 strike price Covered Calls to the Dec 15th Covered Calls at the identical $52.50 strike price.  This was done with only about $.05 time value remaining in the November Call options and a net credit in the rollout of $.76 per share was achieved ($2.68 income for December 15th Calls sold minus $1.92 debit for Nov. 17th Calls bought-to-close).  Based on the Covered Calls Advisor's current market overall Neutral sentiment, a moderately in-the-money position was established.

As detailed below, a potential return-on-investment result for this Best Buy position is +5.3% absolute return for 51 days (equivalent to a +37.8% annualized return-on-investment).  


Best Buy Inc. (BBY) -- New Covered Calls Position
The implied volatility of the Call options was 25.6 today when this position was established. 
The transactions were as follows:
10/25/2017 Bought 400 shares of Best Buy stock @ $55.11 per share 
10/25/2017 Sold 4 Best Buy November 17th, 2017 $52.50 Call options @ $4.23 per share
Note: this was a simultaneous Buy/Write transaction
11/17/2017 Bought-to-Close 4 Nov 17th $52.50 Call options @ $1.92 per share
11/17/2017 Sold -to-Open 4 Dec 15th, 2017 $52.50 Call options @ $2.68 per share
Note: this was a simultaneous Net Credit transaction of $.76 when the BBY stock was at $54.30.
12/05/2017 Upcoming ex-dividend of $.34 per share


A possible overall performance result (including commissions) if Best Buy is in-the-money at the Dec 15th expiration would be as follows:
Covered Calls Original Cost Basis: $20,359.63
= ($55.11 - $4.23)* 400 shares + $7.63 commission

Net Profit Components:
(a) Options Income: +$1,988.37
= ($4.23 - $1.92 + $2.68) * 400 shares) - $7.63 commissions
(b) Dividend Income: +$136.00
= $.34 per share * 400 shares
(c) Capital Appreciation (If BBY stock is above $52.50 strike price at Dec 15th expiration): -$1,048.95
= ($52.50 -$55.11)* 400 shares - $4.95 commission

Total Net Profit: +$1,075.42
= (+$1,988.37 options income +$136.00 dividend income -$1,048.95 capital appreciation)

Absolute Return: +5.3%
= +$1,075.42/$20,359.63
Equivalent Annualized Return: +37.8%
= (+$1,075.42/$20,359.63)*(365/51 days)

Wednesday, November 15, 2017

Established Covered Calls Position in Bank of America Corp.

Today, a second Covered Calls position was established in Bank of America Corp. (ticker BAC) at the $25.00 strike price and the December 15th, 2017 options expiration date.
The Covered Calls Advisor read today's news that Warren Buffett had increased his holdings in BAC during the 3rd quarter.  Since the stock price declined in early morning trading and based on knowledge that many investors piggyback Buffett's stock picks, I was fortunate to be able to establish this position when the stock was very near its lowest price today.  As detailed below, a potential return-on-investment is +1.8% absolute return in 31 days (equivalent to a +21.7% annualized return-on-investment).  This attractive return includes $.12 per share quarterly ex-dividend on November 30th. 



Bank of America Corp. (BAC) -- New Covered Calls Position
The transactions were as follows:
11/15/2017 Bought 1,000 shares of Bank of America stock @ $25.83 per share 
11/15/2017 Sold 10 Bank of America Dec 15th, 2017 $25.00 Call options @ $1.17 per share
Note: this was a simultaneous Buy/Write transaction

A possible overall performance result (including commissions) would be as follows:
Covered Calls Cost Basis: $24,671.65
= ($25.83 - $1.17)* 1,000 shares + $11.65 commission

Net Profit Components:
(a) Options Income: +$1,170.00
= ($1.17* 1,000 shares)
(b) Dividend Income: +$120.00 = $.12 per share * 1,000 shares 
(c) Capital Appreciation (If BAC is above $25.00 strike price at Dec 15th expiration): -$834.95
= ($25.00 -$25.83)* 1,000 shares - $4.95 commission

Total Net Profit: +$455.05
= (+$1,170.00 options income +$120.00 dividend income -$834.95 capital appreciation)

Absolute Return: +1.8%
= +$450.05/$24,671.65
Equivalent Annualized Return: +21.7%
= (+$450.05/$24,671.65)*(365/31 days)

The downside 'breakeven price' at expiration is at $24.54 ($25.83 stock price - $1.17 options income - $.12 dividend income), which is 5.0% below the current market price of $25.83.

Tuesday, November 14, 2017

Established Covered Call Weekly in Wynn Resorts Ltd.

Today, a new Covered Calls positions was entered in Wynn Resorts Ltd. (ticker symbol WYNN) for the November 17th, 2017 options expiration and at the $152.50 strike price when the stock was at $153.90.  The Covered Calls Advisor normally establishes monthly positions, but this is a weekly position that expires this Friday.  The transactions and a potential result for this position described below includes the $.50 ex-dividend tomorrow.  Based on the Covered Calls Advisor's current Neutral sentiment, the closest in-the-money position was established.

As detailed below, a potential return-on-investment is +0.7% absolute return in 4 days (equivalent to a +63.1% annualized return-on-investment).

Wynn Resorts Ltd. (WYNN) -- New Covered Calls Position
The transactions were as follows:
11/14/2017 Bought 100 shares of Wynn Resorts stock @ $153.90 per share 
11/14/2017 Sold 1 WYNN Nov. 17th, 2017 $152.50 Call option @ $2.00 per share
Note: this was a simultaneous Buy/Write transaction with relatively good options liquidity of 1,754 open interest contracts.  The implied volatility of the Call options was 17.9 when this position was established. 


A possible overall performance result (including commissions) would be as follows:
Covered Calls Cost Basis: $15,195.62
= ($153.90 - $2.00)* 100 shares + $5.62 commissions

Net Profit Components:
(a) Options Income: +$200.00
= ($2.00* 100 shares)
(b) Dividend Income: +$50.00
= $.50/share * 100 shares 
(c) Capital Appreciation (If WYNN stock is above $152.50 strike price at Nov 17th expiration): -$144.95
= ($152.50 -$153.90)* 100 shares - $4.95 commission

Total Net Profit: +$105.05
= (+$200.00 options income +$50.00 dividend income -$144.95 capital appreciation)

Absolute Return: +0.7%
= +$105.05/$15,195.62
Equivalent Annualized Return: +63.1%
= (+$105.05/$15,195.62)*(365/4 days)


The downside 'breakeven price' at expiration is at $151.40 ($153.90 - $.50 - $2.00), which is 1.6% below the current market price of $153.90.

Friday, November 10, 2017

Established Covered Calls in Blackstone Group L.P.

Today, a new Covered Calls positions was entered in Blackstone Group L.P. (ticker BX) for the December 15th, 2017 options expiration and at the $31.00 strike price when the stock was at $31.96.  Based on the Covered Calls Advisor's current Neutral sentiment, the closest in-the-money position was established.

As detailed below, a potential return-on-investment is +1.7% absolute return in 36 days (equivalent to a +17.3% annualized return-on-investment).

Blackstone Group L.P. (BX) -- New Covered Calls Position
The implied volatility of the Call options was 25.2 when this position was established.  There are no ex-dividend dates or earnings reports scheduled prior to the December 15th options expiration date.

The transactions were as follows:
11/10/2017 Bought 500 shares of Blackstone Group stock @ $31.96 per share 
11/10/2017 Sold 5 BX December 15th, 2017 $31.00 Call options @ $1.49 per share
Note: this was a simultaneous Buy/Write transaction with relatively low options liquidity at only 167 open interest contracts.

A possible overall performance result (including commissions) would be as follows:
Covered Calls Cost Basis: $15,243.30
= ($31.96 - $1.49)* 500 shares + $8.30 commissions

Net Profit Components:
(a) Options Income: +$745.00
= ($1.49* 500 shares)
(b) Dividend Income: +$0.00 
(c) Capital Appreciation (If BX stock is above $31.00 strike price at Dec 15th expiration): -$484.95
= ($31.00 -$31.96)* 500 shares - $4.95 commission

Total Net Profit: +$260.05
= (+$745.00 options income +$0.00 dividend income -$484.95 capital appreciation)

Absolute Return: +1.7%
= +$260.05/$15,243.30
Equivalent Annualized Return: +17.3%
= (+$260.05/$15,243.30)*(365/36 days)

The downside 'breakeven price' at expiration is at $30.47 ($31.96 - $1.49), which is 4.7% below the current market price of $31.96.

The 'crossover price' at expiration is $33.45 ($31.96 + $1.49).  This is the price above which it would have been more profitable to buy-and-hold Blackstone Group stock until the December 15th, 2017 options expiration date.

Established Covered Calls in Delta Air Lines Inc.

Today, a Covered Calls position was established in Delta Air Lines (DAL) for the December 15th, 2017 options expiration date.  Given the Covered Calls Advisor's current neutral overall market outlook, a moderately in-the-money position was established. Also, there is an upcoming ex-dividend date next week which is taken into consideration in the calculations below.

A potential return-on-investment result is +2.24% absolute return in 36 days (equivalent to a +22.7% annualized return-on-investment if assigned at expiration).
Details for the Delta Air Lines position are provided below to explain the position further for those interested in understanding the type of thought processes and calculations underlying establishing these Covered Calls positions.
 
Delta Air Lines Inc. (DAL) -- New Covered Calls Position
First and foremost, is is essential to invest only in companies that you are bullish about.  Delta meets the Covered Calls Advisor's key quality, value, and growth metrics.  My bullish sentiment is shared by many respected analysts including their highest rating category by Argus, CFRA, and the Average Analysts' Ratings as reported by Reuters.  Also, as shown below, the potential rate-of-return exceeds the Covered Calls Advisor's desired threshold of +20% annualized return if assigned at expiration.  Another positive is the industry high annual dividend yield of 2.5% and this Covered Calls position is likely to capture Delta's next quarterly $.305 ex-dividend next week.

Because of Put/Call parity, Covered Calls and Cash-Secured Puts are synthetically equivalent strategies (when done at the same strike price for the same expiration date).  However, subtle and temporary differences often exist, so just prior to executing the transactions, a comparison is made to see which strategy provides a better potential return.  For Delta, the chart below shows that the potential annualized return of +22.7% for the Covered Calls position is preferable to the +21.6% for a 100% Cash-Secured Puts position in this instance:
 

Notice in the chart above (click on chart to view a larger and more legible version) that there is a column titled "Intervening Earnings" and "NO*" with an indication that "If 'YES' then consider avoiding position".  The "NO" in this case means that Delta does not have a quarterly earnings report prior to the options expiration.

Also in the chart above is a column called "Intervening Ex-Div" and "YES" with an indication that "If 'YES' then complete Dividend Capture Strategy spreadsheet".  This means that Delta will go ex-dividend sometime between today and the options expiration date and the Covered Calls Advisor's Dividend Capture Strategy spreadsheet should be completed to assess whether the pre-determined criteria are met to justify establishing a covered calls position for Delta.  The Covered Calls Advisor has established a set of eleven criteria to evaluate potential covered calls using a dividend capture strategy.  The minimum threshold desired to establish a position is that at least nine of these eleven criteria must be achieved.  As shown in the table below, all eleven criteria are achieved for this Delta Air Lines Inc. position.


The detailed transactions and calculations are as follows:
11/10/2017  Bought 500 Delta Air Lines Inc. shares @ $49.19
11/10/2017 Sold 5 DAL Dec 15, 2017 $47.00 Call options @ $2.86
The Call options Open Interest was 680 contracts when this position was established and their Implied Volatility was 26.9
Note: this was a simultaneous buy/write transaction.
11/16/2017 Upcoming $.305 ex-dividend


A possible overall performance result (including commissions) would be as follows:
Cost Basis Purchase of 500 shares DAL: $23,138.30
= ($49.12 -$2.86)*500 + $8.30 commissions

Net Profit:
(a) Options Income: +$1,430.00
= ($2.86*500 shares)
(b) Dividend Income: +$152.50
= $.305 per share x 500 shares
(c) Capital Appreciation (If DAL is above $47.00 strike price at Dec 15th expiration): -$1,064.95
= ($47.00-$49.12)*500 shares - $4.95 commissions

Total Net Profit (If DAL is above $47.00 strike price at Dec 15, 2017 options expiration): +$532.45
= (+$1,430.00 options income +$152.50 dividends -$1,050.05 capital appreciation)

Absolute Return: +2.3%
= +$532.45/$23,138.30
Annualized Return: +23.3%
= (+$532.45/$23,138.30)*(365/36 days)

The downside 'breakeven price' at expiration is at $45.955 ($49.12 - $2.86 -$.305), which is 6.4% below the current market price of $49.12. 

Using the Black-Scholes Options Pricing Model, the probability of making a profit (if held until the Dec 15th, 2017 options expiration) for this Delta Air Lines covered calls position is 70.3%, so the expected value annualized ROI of this investment (if held until expiration) is +16.4% (+23.3% * 70.3%), an attractive result for this moderately in-the-money covered calls position.

The 'crossover price' at expiration is $51.675 ($49.12 + $2.86 -$.305).  This is the price above which it would have been more profitable to simply buy-and-hold Delta Air Lines stock until December 15th (the December monthly options expiration date) rather than establishing this Covered Calls position.

Thursday, November 9, 2017

Established Covered Calls Positions in Alibaba Group Holding Ltd. and Bank of America Corp.

Today, two new Covered Calls positions were entered in Alibaba Group Holding Ltd. (ticker BABA) and Bank of America Corp. (ticker BAC).   Both positions were established for the December 15th, 2017 options expiration date and given the Covered Calls Advisor's current Overall Market Meter sentiment of Neutral, in-the-money positions were established.

As detailed below, the potential return-on-investments are:
  • Alibaba Group:  A +2.3% absolute return in 37 days (equivalent to a +22.2% annualized return-on-investment); and
  • Bank of America Corp.:  A +1.6% absolute return in 37 days (equivalent to a +15.6% annualized return-on-investment) 
The transactions and potential results are detailed below:

1. Alibaba Group Holding Ltd. (BABA) -- New Covered Calls Position
The implied volatility of the Call options was 30.5 when this position was established, a high level given there is no earnings report prior to the December 15th options expiration.

The transactions were as follows:
11/09/2017 Bought 300 shares of Alibaba stock @ $182.08 per share 
11/09/2017 Sold 3 Alibaba December 15th, 2017 $175.00 Call options @ $11.28 per share
Note: this was a simultaneous Buy/Write transaction

A possible overall performance result (including commissions) would be as follows:
Covered Calls Cost Basis: $51,246.96
= ($182.08 - $11.28)* 300 shares + $6.96 commission

Net Profit Components:
(a) Options Income: +$3,384.00
= ($11.28* 300 shares)
(b) Dividend Income: +$0.00 
(c) Capital Appreciation (If BABA stock is above $175.00 strike price at Dec 15th expiration): -$2,128.95
= ($175.00 -$182.08)* 300 shares - $4.95 commission

Total Net Profit: +$1,155.05
= (+$3,284.00 options income +$0.00 dividend income -$2,128.95 capital appreciation)

Absolute Return: +2.3%
= +$1,155.05/$51,246.96
Equivalent Annualized Return: +22.2%
= (+$1,155.05/$51,246.96)*(365/37 days)

The downside 'breakeven price' at expiration is at $170.80 ($182.08 - $11.28), which is 6.2% below the current market price of $182.08.

Using the Black-Scholes Options Pricing Model, the probability of making a profit (if held until the December 15th, 2017 options expiration) for this Alibaba Covered Calls position is 67.8%, so the expected value annualized ROI of this investment (if held until expiration) is +15.1% (+22.2% * 67.8%), a nice result for this moderately in-the-money Covered Calls position.

The 'crossover price' at expiration is $193.36 ($182.08 + $11.28).  This is the price above which it would have been more profitable to simply buy-and-hold Alibaba stock until the December 15th, 2017 options expiration date.


2. Bank of America Corp. (BAC) -- New Covered Calls Position
The implied volatility of the Call options was 24.1 when this position was established.  There is no intervening earnings report prior to expiration.  There is an upcoming ex-dividend of $.12 on November 30th which is included in the analysis below.

The transactions were as follows:
11/09/2017 Bought 1,000 shares of Bank of America stock @ $26.29 per share 
11/09/2017 Sold 10 Bank of America Dec 15th, 2017 $25.00 Call options @ $1.57 per share
Note: this was a simultaneous Buy/Write transaction

A possible overall performance result (including commissions) would be as follows:
Covered Calls Cost Basis: $24,731.65
= ($26.29 - $1.57)* 1,000 shares + $11.65 commission

Net Profit Components:
(a) Options Income: +$1,570.00
= ($1.57* 1,000 shares)
(b) Dividend Income: +$120.00 = $.12 per share * 1,000 shares 
(c) Capital Appreciation (If BAC is above $25.00 strike price at Dec 15th expiration): -$1,294.95
= ($25.00 -$26.29)* 1,000 shares - $4.95 commission

Total Net Profit: +$395.05
= (+$1,570.00 options income +$120.00 dividend income -$1,294.95 capital appreciation)

Absolute Return: +1.6%
= +$390.05/$24,731.65
Equivalent Annualized Return: +15.6%
= (+$390.05/$24,731.65)*(365/37 days)

The downside 'breakeven price' at expiration is at $24.60 ($26.29 stock price - $1.57 options income - $.12 dividend income), which is 6.4% below the current market price of $26.29.

Using the Black-Scholes Options Pricing Model, the probability of making a profit (if held until the December 15th, 2017 options expiration) for this Bank of America Covered Calls position is 71.5%, so the expected value annualized ROI of this investment (if held until expiration) is +11.2% (+15.6% * 71.5%), a nice result for this in-the-money Covered Calls position.   

Friday, November 3, 2017

Established Covered Calls in Freeport-McMoRan Inc.

Today, a new Covered Calls positions was entered in Freeport-McMoRan Inc. (ticker FCX) for the November 17th, 2017 options expiration and at the $14.00 strike price when the stock was at $14.11.  Based on the Covered Calls Advisor's current Neutral sentiment, the closest at-the-money position was established.

As detailed below, a potential return-on-investment is +2.4% absolute return in 15 days (equivalent to a +57.8% annualized return-on-investment).

Freeport-McMoRan Inc. (FCX) -- New Covered Calls Position
The implied volatility of the Call options was 34.2 when this position was established.  There are no ex-dividend dates or earnings reports scheduled prior to the November 17th options expiration date.

The transactions were as follows:
11/03/2017 Bought 1,000 shares of Freeport-McMoRan stock @ $14.11 per share 
11/03/2017 Sold 10 FCX November 17th, 2017 $14.00 Call options @ $.44 per share
Note: this was a simultaneous Buy/Write transaction with excellent options liquidity at 38,263 open interest.

A possible overall performance result (including commissions) would be as follows:
Covered Calls Cost Basis: $13,681.65
= ($14.11 - $.44)* 1,000 shares + $11.65 commissions

Net Profit Components:
(a) Options Income: +$440.00
= ($.44* 1,000 shares)
(b) Dividend Income: +$0.00 
(c) Capital Appreciation (If FCX stock is above $14.00 strike price at Nov 17th expiration): -$114.95
= ($14.00 -$14.11)* 1,000 shares - $4.95 commission

Total Net Profit: +$325.05
= (+$440.00 options income +$0.00 dividend income -$114.95 capital appreciation)

Absolute Return: +2.4%
= +$325.05/$13,681.65
Equivalent Annualized Return: +57.8%
= (+$325.05/$13,681.65)*(365/15 days)

The downside 'breakeven price' at expiration is at $13.67 ($14.11 - $.44), which is 3.1% below the current market price of $14.11.

Using the Black-Scholes Options Pricing Model, the probability of making a profit (if held until the November 17th, 2017 options expiration) for this Freeport-McMoRan Covered Calls position is 56.8%, so the expected value annualized ROI of this investment (if held until expiration) is +33.4% (+57.8% * 56.8%), a very good result for this moderately in-the-money Covered Calls position.

The 'crossover price' at expiration is $44.55 ($44.11 + $.44).  This is the price above which it would have been more profitable to buy-and-hold Freeport-McMoRan stock until the November 17th, 2017 options expiration date.

Friday, October 27, 2017

Continuation of Covered Calls Position in Devon Energy Corp.

Upon the October 20th, 2017 options expiration, the Covered Calls position in Devon Energy Corp. (ticker symbol DVN) expired with the stock price below the $35.00 strike price.  So, the October Call options expired and the 500 shares of Devon stock were retained in the Covered Calls Advisor Portfolio.  Today, when both the prices of crude oil and also Devon stock had risen by more than 2.0%, a sell-to-open order was executed to sell 5 November 17th, 2017 Call options at the $36.00 strike price for $.93 per share to continue the Devon Covered Calls position.

As detailed below, a potential return-on-investment for this Devon Energy position is +11.5% absolute return in 146 days (equivalent to a +28.8% annualized return-on-investment).  

Devon Energy Corp. (DVN) -- Continuation Covered Calls Position
The transactions were as follows:
05/25/2017  Bought 500 Devon Energy Corp. shares @ $37.45
05/25/2017 Sold 5 DVN June 16, 2017 $36.00 Call options @ $2.10
Note: this was a simultaneous buy/write transaction.
06/13/2017 Ex-dividend of $30.00 ($.06 x 500 shares)
06/16/2017 5 DVN June 16th, 2017 Call options expired
Note: the price of DVN stock closed at $31.76 upon the June 16th options expiration date.
07/03/2017 Sold 5 DVN July 21, 2017 $33.00 Call options @ $.87 per share
07/21/2017 5 DVN Call options expired
07/26/2017 Sold 5 DVN Aug 18, 2017 $35.00 Call options @ $.65 per share
08/18/2017 5 DVN Call options expired
Note: the price of DVN stock was $30.40 upon expiration of the Aug 18th Call options
09/14/2017 Ex-dividend of $30.00 ($.06 x 500 shares)
09/14/2017 Sold 5 DVN October 20th, 2017 $35.00 Call options @ $.89 per share
Note: the price of DVN stock was $34.12 today when the Oct 20th Call options were sold
10/20/2017 5 DVN Call options expired
Note: the price of DVN stock was $34.92 upon expiration of the Oct 20th Call options
10/27/2017 Sold 5 DVN November 17th, 2017 $36.00 Call options @ $.93 per share
Note: the price of DVN stock was $35.66 today when the Nov 17th Call options were sold

A possible overall performance result (including commissions) would be as follows:
Cost Basis of Purchase of 500 shares DVN: $17,679.95
= ($37.45 - $2.10)*500 + $4.95 commission

Net Profit Components:
(a) Options Income: +$2,703.25
= ($2.10 + $.87 + $.65 + $.89 +$.93) *500 shares - 5*$3.35 commissions
(b) Dividend Income: +$60.00
= ($.06 + $.06) * 500 shares
(c) Capital Appreciation (If DVN is above $36.00 strike price at the Nov 17th, 2017 expiration): -$729.95
= ($36.00-$37.45)*500 shares - $4.95 commissions

Total Net Profit (If DVN stock is above $36.00 strike price at Nov 17, 2017 options expiration): +$2,033.30
= (+$2,703.25 options income +$60.00 dividends -$729.95 capital appreciation)

Absolute Return: +11.5%
= +$2,033.30/$17,679.95
Annualized Return: +28.8%
= (+$2,033.30/$17,679.95)*(365/146 days)

Wednesday, October 25, 2017

New Covered Calls in Best Buy Inc.

Today, a new Covered Calls positions was entered in Best Buy Inc. (ticker BBY) for the November 17th, 2017 options expiration and at the $52.50 strike price when the stock was at $55.11.  Based on the Covered Calls Advisor's current Neutral sentiment, a moderately in-the-money position was established.

As detailed below, a potential return-on-investment is +3.2% absolute return in 24 days (equivalent to a +48.0% annualized return-on-investment).  


Best Buy Inc. (BBY) -- New Covered Calls Position
The implied volatility of the Call options was a very high 50.2 when this position was established.  Much of this elevated level is attributable to the upcoming earnings report on Nov. 16th, the day prior to the options expiration date.  This position will be tracked closely and it is possible that it will be closed out prior to the earnings report because of the high uncertainty associated with the stock price movement immediately after the earnings release.

The transactions were as follows:
10/25/2017 Bought 400 shares of Best Buy stock @ $55.11 per share 
10/25/2017 Sold 4 Best Buy November 17th, 2017 $52.50 Call options @ $4.23 per share
Note: this was a simultaneous Buy/Write transaction

A possible overall performance result (including commissions) would be as follows:
Covered Calls Cost Basis: $20,359.63
= ($55.11 - $4.23)* 400 shares + $7.63 commission

Net Profit Components:
(a) Options Income: +$1,692.00
= ($4.23* 400 shares)
(b) Dividend Income: +$0.00 
(c) Capital Appreciation (If BBY stock is above $52.50 strike price at Nov 17th expiration): -$1,048.95
= ($52.50 -$55.11)* 400 shares - $4.95 commission

Total Net Profit: +$643.05
= (+$1,692.00 options income +$0.00 dividend income -$1,048.95 capital appreciation)

Absolute Return: +3.2%
= +$643.05/$20,359.63
Equivalent Annualized Return: +48.0%
= (+$643.05/$20,359.63)*(365/24 days)

The downside 'breakeven price' at expiration is at $50.88 ($55.11 - $4.23), which is 7.7% below the current market price of $55.11.

Using the Black-Scholes Options Pricing Model, the probability of making a profit (if held until the November 17th, 2017 options expiration) for this Best Buy Covered Calls position is 66.6%, so the expected value annualized ROI of this investment (if held until expiration) is +32.0% (+48.0% * 66.6%), a very good result for this moderately in-the-money Covered Calls position.

The 'crossover price' at expiration is $59.34 ($55.11 + $4.23).  This is the price above which it would have been more profitable to buy-and-hold Best Buy stock until the November 17th, 2017 options expiration date.

Monday, October 23, 2017

Covered Calls Established in Alibaba Group Holding Ltd. and Citigroup Inc.

Today, two new Covered Calls positions were entered in Alibaba Group Holding Ltd. (ticker BABA) and Citigroup Inc. (ticker C).   Both positions were established for the November 17th, 2017 options expiration date and given the Covered Calls Advisor's current Overall Market Meter sentiment of Neutral, in-the-money positions were taken.

As detailed below, the potential return-on-investments are:
  • Alibaba Group:  A +2.2% absolute return in 26 days (equivalent to a +31.2% annualized return-on-investment); and
  • Citigroup Inc.:  A +1.4% absolute return in 26 days (equivalent to a +19.9% annualized return-on-investment) 
The transactions and potential results are detailed below:

1. Alibaba Group Holding Ltd. (BABA) -- New Covered Calls Position
The implied volatility of the Call options was 39.5 when this position was established.  This is a very high level which in large part is due to the uncertainty associated with the upcoming earnings report on Nov 2nd and its annual Singles Day sale on Nov 11th.

The transactions were as follows:
10/23/2017 Bought 300 shares of Alibaba stock @ $174.13 per share 
10/23/2017 Sold 3 Alibaba November 17th, 2017 $165.00 Call options @ $12.73 per share
Note: this was a simultaneous Buy/Write transaction

A possible overall performance result (including commissions) would be as follows:
Covered Calls Cost Basis: $48,426.96
= ($174.13 - $12.73)* 300 shares + $6.96 commission

Net Profit Components:
(a) Options Income: +$3,819.00
= ($12.73* 300 shares)
(b) Dividend Income: +$0.00 
(c) Capital Appreciation (If BABA stock is above $165.00 strike price at Nov 17th expiration): -$2,743.95
= ($165.00 -$174.13)* 300 shares - $4.95 commission

Total Net Profit: +$1,075.05
= (+$3,819.00 options income +$0.00 dividend income -$2,743.95 capital appreciation)

Absolute Return: +2.2%
= +$1,075.05/$48,426.96
Equivalent Annualized Return: +31.2%
= (+$1,075.05/$48,426.96)*(365/26 days)

The downside 'breakeven price' at expiration is at $161.40 ($174.13 - $12.73), which is 7.3% below the current market price of $174.13.

Using the Black-Scholes Options Pricing Model, the probability of making a profit (if held until the November 17th, 2017 options expiration) for this Alibaba Covered Calls position is 71.3%, so the expected value annualized ROI of this investment (if held until expiration) is +22.2% (+31.2% * 71.3%), a nice result for this moderately in-the-money Covered Calls position.

The 'crossover price' at expiration is $186.86 ($174.13 + $12.73).  This is the price above which it would have been more profitable to simply buy-and-hold Alibaba stock until the October 20th, 2017 options expiration date.


2. Citigroup Inc.(C) -- New Covered Calls Position
The implied volatility of the Call options was 16.5 when this position was established.  There is no intervening earnings report prior to expiration.  There is an upcoming ex-dividend of $.32 on November 3rd which is included in the analysis below.

The transactions were as follows:
10/23/2017 Bought 400 shares of Citigroup stock @ $73.76 per share 
10/23/2017 Sold 4 Citigroup Nov 17th, 2017 $72.50 Call options @ $1.97 per share
Note: this was a simultaneous Buy/Write transaction

A possible overall performance result (including commissions) would be as follows:
Covered Calls Cost Basis: $28,723.63
= ($73.76 - $1.97)* 400 shares + $7.63 commission

Net Profit Components:
(a) Options Income: +$788.00
= ($1.97* 400 shares)
(b) Dividend Income: +$128.00 = $.32 per share * 400 shares 
(c) Capital Appreciation (If Citi is above $72.50 strike price at Nov 17th expiration): -$508.95
= ($72.50 -$73.76)* 400 shares - $4.95 commission

Total Net Profit: +$407.05
= (+$788.00 options income +$128.00 dividend income -$508.95 capital appreciation)

Absolute Return: +1.4%
= +$407.05/$28,723.63
Equivalent Annualized Return: +19.9%
= (+$407.05/$28,723.63)*(365/26 days)

The downside 'breakeven price' at expiration is at $71.79 ($73.76 - $1.97), which is 2.7% below the current market price of $73.76.

Using the Black-Scholes Options Pricing Model, the probability of making a profit (if held until the November 17th, 2017 options expiration) for this Citigroup Covered Calls position is 63.6%, so the expected value annualized ROI of this investment (if held until expiration) is +12.7% (+19.9% * 63.6%), a nice result for this in-the-money Covered Calls position.   

Saturday, October 21, 2017

October 20th, 2017 Options Expiration Results

The Covered Calls Advisor Portfolio held nine positions with October 20th, 2017 options expirations.   Seven of these positions (Alibaba Group Holding Ltd., Best Buy Inc., Discover Financial Services, JPMorgan Chase & Co., Las Vegas Sands Corp., United States Steel, and Western Digital Corp.) closed in-the-money, so the maximum possible return-on-investment result was achieved for each position:
  • Alibaba Group Holding Ltd.:  +1.3% absolute return (+18.4% annualized return) in 26 days
  • Best Buy Inc.:  +3.96% absolute return (+27.8% annualized return) in 52 days  
  • Discover Financial Services+2.5% absolute return (+19.6% annualized return) in 46 days
  • JPMorgan Chase & Co.:  +3.2% absolute return (+25.2% annualized return) in 46 days
  • Las Vegas Sands Corp.:  +2.6% absolute return (+20.8% annualized return) in 46 days
  • United States Steel+1.5% absolute return (+54.6% annualized return) in 10 days
  • Western Digital Corp.:  +3.6% absolute return (+28.3% annualized return) in 46 days
The cash now available in the Covered Calls Advisor Portfolio from the closing of these seven positions will be retained until new Covered Calls and/or 100% Cash-Secured Puts positions are established.  Any new position(s) established with this available cash will be posted on this site on the same day the transactions occur.  

The remaining two positions (Devon Energy Corp. and Range Resources Corp.) closed yesterday with their stock price below their strike prices, so those shares will remain in the Covered Calls Advisor Portfolio (see holdings in right sidebar) until either the stock is sold or a continuation Covered Calls position is established. 

As an example of how the Return-On-Investment (ROI) results (both Absolute and Annualized ROIs) are calculated, details from the Covered Calls Advisor's Alibaba position are provided below:

Alibaba Group Holding Ltd. (BABA) -- Covered Calls Position Closed on Oct 20th Expiration 
The transactions were as follows:
09/25/2017  Bought 200 Alibaba shares @ $169.05
09/25/2017 Sold 2 BABA October 20, 2017 $160.00 Call options @ $11.15
Note: this was a simultaneous Buy/Write transaction
10/20/2017 200 BABA shares sold at $160.00 strike price upon the Oct 20th options expiration  

The overall performance result (including commissions) was as follows:
Cost Basis: $31,586.29
= ($169.05 -$11.15) * 200 shares + $6.29 commission

Net Profit Components:
(a) Options Income: +$2,230.00
= ($11.15 *200 shares)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (BABA was above $160.00 strike price at Oct 20, 2017 expiration): -$1,814.95
= ($160.00-$169.05)*200 shares - $4.95

Total Net Profit: +$415.05
= (+$2,230.00 options income +$0.00 dividend income -$1,814.95 capital appreciation)

Absolute Return: +1.3%
= +$415.05/$31,586.29
Annualized Return: +18.4%
= (+$415.05/$31,586.29)*(365/26 days)

Wednesday, October 18, 2017

Early Close of Nucor Corp. Covered Calls

Today, the Covered Calls Advisor closed out the Nucor Corp. (ticker symbol NUE) covered calls position.  This decision was made since the price of Nucor has risen quickly from the $54.16 purchase price to $57.35 today so that there was only $.05 of time value remaining in the Call options.  Thus, the overwhelming majority of the maximum potential profit has already been achieved.  Given the stock price uncertainty inherent in tomorrow's earnings report, the Covered Calls Advisor decided to lock in the profit today.

As detailed below, the actual return-on-investment result for this closed position was a +3.1% absolute return (equivalent to +22.3% annualized return) for the 51 days holding period.  

Nucor Corp. -- Covered Calls Position is Closed
The transactions were as follows:
08/28/2017  Bought 200 Nucor Corp. shares @ $54.16
08/28/2017 Sold 2 NUE October 20, 2017 $52.50 Call options @ $2.96
Note: this was a simultaneous buy/write transaction.
09/28/2017 Ex-dividend of $.3775 per share
10/18/2017 Sold 200 Nucor Corp. shares @ $57.35 per share
10/18/2017 Bought-to-Close 2 NUE Oct 20th, 2017 $52.50 Call options @ $4.90 per share

The overall performance result (including commissions) was as follows:
Cost Basis Purchase of 200 shares NUE: $10,246.29
= ($54.16 -$2.96)*200 + $6.29 commissions

Net Profit:
(a) Options Income: -$389.34
= ($2.96 - $4.90) *200 shares - $1.34 commissions
(b) Dividend Income: +$75.50
= $.3775 per share x 200 shares
(c) Capital Appreciation: +$633.05
= ($57.35 -$54.16)*200 shares - $4.95 commissions

Total Net Profit: +$319.21
= (-$389.34 options income +$75.50 dividends +$633.05 capital appreciation)

Absolute Return: +3.1%
= +$319.21/$10,246.29
Equivalent Annualized Return: +22.3%
= (+$330.55/$10,246.29)*(365/51 days)

Friday, October 13, 2017

Covered Calls Established for CVS Health Corporation

Today, a Covered Calls positions were established in CVS Health Corporation (ticker CVS).  Given the Covered Calls Advisor's current cautious overall market outlook, a moderately in-the-money Covered Calls position was established with the November 17th, 2017 $70.00 Call options when the stock price was $72.84.  This $70.00 strike price is -0.5 standard deviations from the current stock price.  Note: A recent research paper "Which Index Options Should You Sell?" by Israelov and Tummla determined that in the range of -0.5 to -0.7 standard deviations on average yielded the best alpha returns for us options sellers.  Also, there is an upcoming $.50 ex-dividend prior to the options expiration date which is taken into consideration in the details presented below.

As detailed below, some potential return-on-investment results are:
  • A +1.65% absolute return (equivalent to +60.1% annualized return for the next 10 days) if the stock is assigned early (business day prior to the October 23rd ex-div date); OR 
  • A +2.37% absolute return (equivalent to +24.0% annualized return over the next 36 days) if the stock is assigned on the Nov 17th, 2017 options expiration date.
Either result exceeds the Covered Calls Advisor's target for a greater than +20% potential annualized return-on-investment.

1. CVS Health Corporation (CVS) -- New Covered Calls Position
As shown in the chart below, a Covered Calls positions was established since the potential return-on-investment results are preferable in comparison to its synthetically equivalent short 100% Cash-Secured Put options position in this instance:
You will notice in the chart above (click on chart to view a larger and more legible version) that there is a column titled "Intervening Earnings" and "YES*" with an indication that "If 'YES' then consider avoiding position".  This position was established because of the Covered Calls Advisor's confidence that analysts' expectations that upcoming earnings per share will be achieved as well as the relatively narrow range of those estimates. 
Also in the chart above is a column called "Intervening Ex-Div" and "YES" with an indication that "If 'YES' then complete Dividend Capture Strategy spreadsheet".  This means that CVS will go ex-dividend sometime between today and the options expiration date and the Covered Calls Advisor's Dividend Capture Strategy spreadsheet should be completed to determine if the pre-determined criteria are met to justify establishing a Covered Calls position in CVS.

The Covered Calls Advisor has established a set of eleven criteria to evaluate potential Covered Calls using a dividend capture strategy.  The minimum threshold desired to establish a position is that at least nine of these eleven criteria must be achieved.  As shown in the table below, ten of the eleven criteria are achieved for this CVS Covered Calls position.

For this position, the downside 'breakeven price' at expiration is at $68.35 ($72.84 - $3.99 -$.50), which is 6.2% below the current market price of $72.84. 

Using the Black-Scholes Options Pricing Model, the probability of making a profit (if held until the November 17th, 2017 options expiration) for this CVS Covered Calls position is 68.8%, so the expected value annualized ROI of this investment (if held until expiration) is +16.5% (+24.0% * 68.8%), a satisfactory result for this moderately in-the-money Covered Calls position.

The 'crossover price' at expiration is $76.33 ($72.84 + $3.99 -$.50).  This is the price above which it would have been more profitable to simply buy-and-hold CVS stock until Nov 17th (the November monthly options expiration date) rather than establishing this Covered Calls position.

Wednesday, October 11, 2017

Covered Calls Position Established in United States Steel Corp.

Today, a Covered Calls positions was established in United States Steel (ticker symbol X).  This was established when the stock price was $24.69 and eight October 20th, 2017 $24.00 Calls were sold at $1.05.   U.S. Steel has 2.9% downside protection to the $24.00 strike price, a conservative position since the Covered Calls Advisor's current Overall Market Meter sentiment is Neutral. 


As detailed below, the potential return-on-investment is +1.5% absolute return in 10 days (equivalent to a +54.6% annualized return-on-investment).  


United States Steel (X) -- New Covered Calls Position
The implied volatility of the Call options was 39.5 when this position was established, a very high level considering that there is no earnings report prior to the Oct. 20th expiration date.
The transactions were as follows:
10/11/2017 Bought 800 shares of United States Steel stock @ $24.69 per share 
10/11/2017 Sold 8 US Steel October 20th, 2017 $24.00 Call options @ $1.05 per share
Note: this was a simultaneous Buy/Write transaction

A possible overall performance result (including commissions) would be as follows:
Covered Calls Cost Basis: $18,922.31
= ($24.69 - $1.05)* 800 shares + $10.31 commission

Net Profit:
(a) Options Income: +$840.00
= ($1.05* 800 shares)
(b) Dividend Income: +$0.00 
(c) Capital Appreciation (If USS is above $24.00 strike price at Oct 20th expiration): -$556.95
= ($24.00 -$24.69)* 800 shares - $4.95 commission

Total Net Profit (If US Steel stock price is above $24.00 strike price at Oct 20th options expiration): +$283.05
= (+$840.00 options income +$0.00 dividend income -$556.95 capital appreciation)

Absolute Return: +1.5%
= +$283.05/$18,922.31
Annualized Return: +54.6%
= (+$283.05/$18,922.31)*(365/10 days)

The downside 'breakeven price' at expiration is at $23.64 ($24.69 - $1.05), which is 4.3% below the current market price of $24.69.

The probability of making a profit (if held until the October 20th, 2017 options expiration) for this U.S. Steel Covered Calls position is 67.8%. This compares with a probability of profit of 50.3% for a buy-and-hold of US Steel shares over the same time period. Using this probability of profit of 67.8%, the expected value annualized return-on-investment (if held until expiration) is +37.0% (+54.6% * 67.8%).  

The 'crossover price' at expiration is $25.74 ($24.69 + $1.05).  This is the price above which it would have been more profitable to simply buy-and-hold US Steel stock until the October 20th, 2017 options expiration date.

Tuesday, October 3, 2017

Roll-Up of JPMorgan Chase & Co. Covered Calls

Today, the Covered Calls position in JPMorgan Chase & Co. was rolled up from the October 20th $87.50 strike price to the Oct 20th $95.50 strike price.  With an upcoming dividend of $.56 in two days and the stock deep in-the-money trading at $97.07 per share, there was only $.04 time value remaining in the short Call options.  Therefore, there is a strong likelihood that the stock would have been called away tomorrow by the owner of the Calls to capture the dividend.

The Covered Calls Advisor decided to roll-up to the $95.50 strike price (with $.54 time value remaining) to ensure that the dividend will be captured and that there is also a good possibility of also capturing the $.54 per share time value as additional profit as long as JPM stock is above the $95.50 strike price on the Oct. 20th expiration date.  If this occurs, the financial result would be a +3.2% absolute return in 46 days (equivalent to a +25.2% annualized return-on-investment) for this JPMorgan Chase position.  Details are provided below.
 
1. JPMorgan Chase & Co. (JPM) --  Covered Calls Roll-Up Continuation
The transactions were:
09/05/2017 Bought 300 JPM shares @ $89.26
09/05/2017 Sold 3 JPM October 20th, 2017 $87.50 Call options @ $3.49
Note: a simultaneous buy/write transaction was executed.
10/03/2017 Bought-to-Close 3 JPM Oct. 20th $87.50 Call options @ $9.61 per share
10/03/2017 Sold-to-Open 3 JPM Oct. 20th $95.50 Call options @ $2.11 per share
10/05/2017 Upcoming quarterly ex-dividend of $.56 per share

A possible overall performance result (including commissions) for this ongoing JPM Covered Calls position is as follows:
Stock Purchase Cost Basis: $25,735.95
= ($89.26 - $3.49) * 300 shares +$4.95 commission

Net Profit:
(a) Options Income: -$1,216.92
= ($3.49 -$9.61 +$2.11) *300 shares - 2* $6.96 commissions

(b) Dividend Income (If JPM assigned at October 20th, 2017 expiration): +$168.00
= ($.56 dividend per share x 300 shares)
(c) Capital Appreciation (If JPM assigned at $95.50 strike price): +1,867.05
+($95.50 -$89.26)*300 - $4.95 commission

Total Net Profit (If JPM assigned on Oct. 20th, 2017 at $95.50 strike price): +$818.13
= (-$1,216.92 +$168.00 +$1,867.05)

Absolute Return (If JPM assigned at $95.50 at Oct 20th, 2017 expiration): +3.2%
= +$818.13/$25,735.95
Annualized Return (If JPM assigned at $82.50 at Jul2017 expiration): +25.2%
= (+$818.13/$25,735.95)*(365/46 days)

Wednesday, September 27, 2017

Continuation of Covered Calls Position in Range Resources Corp.

Upon the August 18th, 2017 options expiration, the Covered Calls position in Range Resources Corp. (ticker symbol RRC) expired with the stock price below the $21.00 strike price.  So, the August Call options expired and the 500 shares of Range Resources stock were retained in the Covered Calls Advisor Portfolio.  Today, with RRC stock at $20.03, a sell-to-open order was executed to sell 5 October 20th, 2017 Call options at the $21.00 strike price for $.45 per share to continue the Range Resources Covered Calls position.

The history of this Range Resources position so far as well as a potential return-on-investment result is detailed below:


Range Resources Corp. (RRC) -- Continuation Covered Calls Position
The transactions were as follows:
07/26/2017  Bought 500 Range Resources Corp. shares @ $21.65
07/26/2017 Sold 5 RRC Aug 18, 2017 $21.00 Call options @ $1.25
Note: this was a simultaneous buy/write transaction.
08/18/2017 5 RRC Aug 18, 2017 Call options expired
Note: price of RRC was $17.92 upon options expiration
09/27/2017 Sold 5 RRC October 20th, 2017 $21.00 Call options @ $.45 per share
Note: the price of RRC stock was $20.03 today when the Oct 20th Call options were sold

A possible overall performance result (including commissions) would be as follows:
Cost Basis of 500 shares of RRC: $10,204.95
= ($21.65 - $1.25)*500 shares + $4.95 commission

Net Profit:
(a) Options Income: +$838.35
= ($1.25 + $.45) *500 shares - $11.65 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If RRC is above $21.00 strike price at Oct 20th expiration): -$329.95
= ($21.00-$21.65)*500 shares - $4.95 commissions

Total Net Profit (If RRC is above $21.00 strike price at Oct 20th, 2017 options expiration): +$508.40
= (+$838.35 options income +$0.00 dividends -$329.95 capital appreciation)

Absolute Return: +5.0%
= +$508.40/$10,204.95
Annualized Return: +21.1%
= (+$508.40/$10,204.95)*(365/86 days)

Monday, September 25, 2017

Established Covered Calls in Alibaba Group Holding Ltd.

Today, the Covered Calls Advisor established a new Covered Calls position in Alibaba Group Holding Ltd. (ticker symbol BABA) with 26 days remaining until the October 20th, 2017 options expiration date.  This position is a relatively conservative one since it was established today when the price of Alibaba was $169.05 (5.4% downside protection to the $160.00 strike price).  This strike price is -0.68 standard deviations from the current stock price.  Note: A recent research paper "Which Index Options Should You Sell?" by Israelov and Tummla determined that in the range of -0.5 to -0.7 standard deviations on average yielded the best alpha returns for us options sellers.  

For Alibaba, the chart below (click on the chart to view a larger and more legible version) shows that the potential annualized return of +18.4% for this Covered Calls position is preferable to the +16.8% to establish a comparable 100% Cash-Secured Puts position. 

The implied volatility of the Call options was 30.3 when this position was established and the open interest was 20,811 contracts  

The downside 'breakeven price' at expiration is at $157.90 ($169.05 - $11.15), which is 6.6% below the current market price of $169.05.  

Using the Black-Scholes Options Pricing Model, the probability of making a profit (if held until the October 20th, 2017 options expiration) for this position is 76.1%. This compares with a probability of profit of 50.2% for a buy-and-hold of this Alibaba stock over the same time period. Using this probability of profit of 76.1%, the expected value for the annualized return-on-investment (if held until expiration) is +14.0% (+18.4% maximum potential annualized return on investment * 76.1%), an attractive risk/reward profile for this conservative investment.  

Finally, the 'crossover price' at expiration is $180.20 ($169.05 + $11.15).  This is the price above which it would have been more profitable to simply buy-and-hold Alibaba stock until the Oct. 20th options expiration date rather than establishing this Covered Calls position.

Friday, September 15, 2017

September 2017 Options Expiration Results

 The Covered Calls Advisor Portfolio had eight Covered Calls positions with September 15th, 2017 options expirations.  Every position  closed in-the-money, so the maximum possible return-on-investment result was achieved for each of these positions:
  • Alibaba Group Holding Ltd.:  +3.15% absolute return (+31.9% annualized return) in 36 days
  • Applied Materials Inc.:  +2.1% absolute return (+35.1% annualized return) in 22 days  
  • Bank of America Corp.: +1.3% absolute return (+13.2% annualized return) in 37 days
  • Delta Air Lines Inc. (position #1): +1.0% absolute return (+7.8% annualized return) in 45 days
  • Delta Air Lines Inc. (position #2): +2.3% absolute return (+21.9% annualized return) in 37 days
  • Micron Technology Inc.+2.1% absolute return (+29.3% annualized return) in 26 days
  • Tenneco Inc.: +1.22% absolute return (+23.4% annualized return) in 19 days
  • Voya Financial Inc.+1.7% absolute return (+23.5% annualized return) in 26 days
The cash now available in the Covered Calls Advisor Portfolio from the closing of these positions will be retained until new Covered Calls and/or 100% Cash-Secured Puts positions are established.  Any new position(s) established with this available cash will be posted on this site on the same day the transactions occur.  



Thursday, September 14, 2017

Continuation of Covered Calls Position in Devon Energy Corp.

Upon the August 18th, 2017 options expiration, the Covered Calls position in Devon Energy Corp. (ticker symbol DVN) expired with the stock price below the $35.00 strike price.  So, the August Call options expired and the 500 shares of Devon stock were retained in the Covered Calls Advisor Portfolio.  Today, when Devon stock had risen to $34.12, a sell-to-open order was executed to sell 5 October 20th, 2017 Call options at the $35.00 strike price for $.89 per share to continue the Devon Covered Calls position.

The history of this Devon Energy position so far as well as a potential return-on-investment result is detailed below:

Devon Energy Corp. (DVN) -- Continuation Covered Calls Position
The transactions were as follows:
05/25/2017  Bought 500 Devon Energy Corp. shares @ $37.45
05/25/2017 Sold 5 DVN June 16, 2017 $36.00 Call options @ $2.10
Note: this was a simultaneous buy/write transaction.
06/13/2017 Ex-dividend of $30.00 ($.06 x 500 shares)
06/16/2017 5 DVN June 16th, 2017 Call options expired
Note: the price of DVN stock closed at $31.76 upon the June 16th options expiration date.
07/03/2017 Sold 5 DVN July 21, 2017 $33.00 Call options @ $.87 per share
07/21/2017 5 DVN Call options expired
07/26/2017 Sold 5 DVN Aug 18, 2017 $35.00 Call options @ $.65 per share
08/18/2017 5 DVN Call options expired
Note: the price of DVN stock was $30.40 upon expiration of the Aug 18th Call options
09/14/2017 Ex-dividend of $30.00 ($.06 x 500 shares)
09/14/2017 Sold 5 DVN October 20th, 2017 $35.00 Call options @ $.89 per share
Note: the price of DVN stock was $34.12 today when the Oct 20th Call options were sold

A possible overall performance result (including commissions) would be as follows:
Cost Basis of Purchase of 500 shares DVN: $17,679.95
= ($37.45 - $2.10)*500 + $4.95 commission

Net Profit:
(a) Options Income: +$2,241.60
= ($2.10 + $.87 + $.65 + $.89) *500 shares - 4*$3.35 commissions
(b) Dividend Income: +$60.00
= ($.06 + $.06) * 500 shares
(c) Capital Appreciation (If DVN is above $35.00 strike price at Oct 20th, 2017 expiration): -$1,229.95
= ($35.00-$37.45)*500 shares - $4.95 commissions

Total Net Profit (If DVN stock is above $35.00 strike price at Oct 20, 2017 options expiration): +$1,017.65
= (+$2,241.60 options income +$60.00 dividends -$1,229.95 capital appreciation)

Absolute Return: +5.8%
= +$1,017.65/$17,679.95
Annualized Return: +14.2%
= (+$1,017.65/$17,679.95)*(365/148 days)

Friday, September 8, 2017

Early Assignment of MGM Resorts International Covered Calls

This morning the Covered Calls Advisor received email, phone mail, and text notifications from my broker (Schwab) that the 7 MGM Resorts International (ticker symbol MGM) September 15th, 2017 Call options were exercised early, so the 700 shares of MGM stock in the Covered Calls Advisor Portfolio were assigned (i.e. sold) at the $30.00 strike price. 

Early exercise by the owners of these Call options was plausible since there was only $0.04 per share [$4.03 midpoint of Call options bid/ask price - ($33.99 current stock price - $30.00 strike price)] time value remaining in these Call options.  So the Call owners were willing to immediately forego the remaining $0.04 per share time value by exercising their option to buy the shares (in order to capture today's $0.11 per share ex-dividend).  The per share stock price had increased from $31.56 when this MGM position was originally established on August 28th to $33.99 at yesterday's market close.

The Covered Calls Advisor preferred this early assignment outcome instead of keeping the Covered Calls position and capturing the $0.11 per share ex-dividend today since this early assignment resulted in higher annualized return-on-investment (+27.1% achieved) rather than if the position had instead been assigned on the September 15th options expiration date; which (including the $0.11 per share dividend) would have resulted in a +22.8% annualized ROI. Using the Dividend Capture Strategy spreadsheet has been working nicely recently.  In addition to this MGM position, recent early assignments in Kohl's, Intel, and JPMorgan Chase Covered Calls positions have achieved nice return-on-investment results. 

As detailed below, the actual return-on-investment result achieved for this MGM position was a +0.8% absolute return (equivalent to +27.1% annualized return) for the 11 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.


MGM Resorts International -- Covered Calls Position Closed by Early Assignment
The transactions were as follows:
08/28/2017  Bought 700 MGM Resorts International shares @ $31.56
08/28/2017 Sold 7 MGM Sept 15, 2017 $30.00 Call options @ $1.81 and the implied volatility of these options was 29.2 when this buy/write transaction was executed.
09/07/2017 Seven Call options exercised early (day prior to ex-dividend date); so stock assigned (sold) at $30.00 strike price.
Note: the price of MGM was $33.99 when these Calls were exercised

The overall performance result (including commissions) was as follows:
Cost Basis of 7 Covered Calls in MGM: $20,834.64
= ($31.56 -$1.81)*700 + $9.64 commissions

Components of Net Profit:
(a) Options Income: +$1,267.00
= ($1.81*700 shares)
(b) Dividend Income: $0.00
(c) Capital Appreciation: -$1,096.95
= ($30.00-$31.56)*700 shares - $4.95 commissions

Total Net Profit (MGM assigned early on day prior to Sept 8th ex-dividend date) : +$170.05
= (+$1,267.00 options income +$0.00 dividends - $1,096.95 capital appreciation)

Absolute Return: +0.8%
= +$170.05/$20,834.64
Equivalent Annualized Return: +27.1%
= (+$170.05/$20,834.64)*(365/11 days)



Tuesday, September 5, 2017

Covered Calls Position Established in Discover Financial Services

Today, a Covered Calls positions was established in Discover Financial Services (ticker symbol DFS).  This was established when the stock price was $58.46 and three October 20th, 2017 $57.50 Calls were sold at $2.36.   This is are relatively conservative position since the Covered Calls Advisor's current Overall Market Meter sentiment is Neutral, so Discover has 1.6% downside protection to the $57.50 strike price.

Discover is currently rated as a good value by many in the investment community.  Ratings by 24 analysts are: 9 Buys; 8 Outperforms; 6 Neutral; and 1 Underperform.  In addition, the current Discover Financial Services target price for some services I follow are well above its current $58.46 price: S&P -- $73; Argus -- $74; and Credit Suisse -- $82. 

As detailed below, the potential return-on-investment is +2.5% absolute return in 46 days (equivalent to a +19.6% annualized return-on-investment).  


Discover Financial Services (DFS) -- New Covered Calls Position
The implied volatility of the Call options was 21.7 when this position was established.
The transactions were as follows:
09/05/2017 Bought 300 shares of Discover Financial Services @ $58.46 
09/05/2017 Sold 3 DFS October 20th, 2017 $57.50 Call options @ $2.36
Note: this was a simultaneous Buy/Write transaction

A possible overall performance result (including commissions) would be as follows:
Covered Calls Cost Basis: $16,836.96
= ($58.46 - $2.36)* 300 shares + $6.96 commission

Net Profit:
(a) Options Income: +$708.00
= ($2.36* 300 shares)
(b) Dividend Income: +$0.00 
(c) Capital Appreciation (If DFS is above $57.50 strike price at Oct 20th expiration): -$292.95
= ($57.50 -$58.46)* 300 shares - $4.95 commission

Total Net Profit (If Discover stock price is above $57.50 strike price at Oct 20th options expiration): +$415.05
= (+$708.00 options income +$0.00 dividend income -$292.95 capital appreciation)

Absolute Return: +2.5%
= +$415.05/$16,836.96
Annualized Return: +19.6%
= (+$415.05/$16,836.96)*(365/46 days)

The downside 'breakeven price' at expiration is at $56.10 ($58.46 - $2.36), which is 4.0% below the current market price of $58.46.

The probability of making a profit (if held until the October 20th, 2017 options expiration) for this Discover Financial Services Covered Calls position is 59.0%. This compares with a probability of profit of 50.2% for a buy-and-hold of Discover shares over the same time period. Using this probability of profit of 59.0%, the expected value annualized return-on-investment (if held until expiration) is +11.6% (+19.6% * 59.0%).  

The 'crossover price' at expiration is $60.82 ($58.46 + $2.36).  This is the price above which it would have been more profitable to simply buy-and-hold Discover Financial Services stock until the October 20th, 2017 options expiration date.