Early Covered Call Assignment!!! $BNS April 1, 2016

I gave someone a lot of money!

April 1, 2016 Friday morning I noticed a voice mail from a Toll Free number on my cell phone, but ignored it thinking it was spam. Then when I tried signing into BMO Investorline it showed: "Account Suspended".

I gave them a call ASAP and was transferred to the Options Desk where I was told a Non-Scheduled Assignment occurred for my BNS Call expiring April 15, 2016 at $56. Normally, on option assignment date the transaction would flow through without notification, but with a non-standard assignment they need to call the client to clarify no trades can be done buy back the exercised Options.

It was obvious why the Call Options I wrote were assigned. With the stock price at $62.72 and strike price at $56 there was an immediate gain of $2,688.00 or $6.72/share for the option holder. This was implied by the end of day paper loss of -$2,173.85, -370.87%. The previous day's closing price $63.47, the spread was even higher.

I was confused why the assignment occurred on the ex-dividend date April 1st. The transaction summary revealed why as the holder requested the order to be executed on or before March 31st. As can be seen below the sale occurred March 31st. Unfortunately, this means I will not get the $0.72/share dividend, of which I was hoping to boost my returns.

The real pain point was the commissions that I paid for this one transaction: $53.10. This doesn't include all the other commissions paid as I manoeuvred to keep my BNS long term investment afloat. 

However, I still managed to come out on top with this Covered Call with a $487.43 net profit. As well, my average cost back in August 12, 2015 was $57.4628. Since then, as the market declined, my average share cost has been reduced to $56.0965, a reduction of $1.3663, 2.3777%. Even better, my holdings of BNS have nearly doubled from last year and I've made additional profits from the manoeuvring.

This has definitely been a learning experience and I've now gone on to explore other ways of doing a Covered Call. My next investment is ENB.