MMM hit option expiration day at $89.29. The calls covering this position were assigned and this trade is over. Basically the stock went straight up since being acquired on 12/10 at a price of $84.09 after commissions.
With the "luck" (oh...I meant to say skill) of buying almost exactly at the short term bottom, and the benefit of hind site it would have been better to own the stock outright for a 6.1% return. The covered calls scenario "only" returned 4% over the same week period. The S&P is up about 3.1% from that date so both strategies "beat the market". Of course the call strategy was less risky. If the stock had fallen we were protected down to $81.50.
Of course, the call also "forced" the discipline to sell after this run up. The strike date was purposely selected to be right before the earnings catalyst on Tuesday. Obviously it could go higher after earnings and we will have missed even more of an opportunity. But.. ..the general trend this quarter for all companies ( and for MMM in the past) has been to "sell on the news" with earnings. I would not be surprised to see that happen in this case. We will monitor the earnings results and commentary. If MMM does pull back more towards its $85 and its 200 dms support it might be appropriate to put a trade back on before the stock goes x-div in mid Feb...stay tuned.
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