Covered Call Position Established in Amazon.com Inc.

Today a Covered Call position of only 10 days duration was established when my buy/write net debit limit order was executed at a price of $202.82.  One hundred shares of Amazon.com Inc. (ticker symbol AMZN) stock were purchased at $209.62 and 1 July 3rd, 2025 $205.00 Call option was sold at $6.80 per share.  So, the potential time value profit if the stock is in-the-money and therefore closed out by assignment on the options expiration date is $2.18 per share [$6.80 Call option premium - ($209.62 stock purchase price - $205.00 strike price)].  The probability that the Call option will be above the $205.00 strike price on the July 3rd options expiration date when this Covered Call position was established was 68.3%.

Amazon is the leading market cap company in the Consumer Discretionary sector by a very large margin.  JP Morgan's analyst noted today that Amazon will surpass Walmart this year (for the first time) as #1 in total retail sales in the U.S.  Of course, Amazon benefits tremendously in the Information Technology sector by also being #1 in revenue as the world's #1 cloud computing platform.  

There are 53 Wall Street analysts that cover Amazon.com and their average target price is $241.90 (+15.4% above today's stock purchase price).   As detailed in the chart below, Amazon passes all 20 criteria in my "Next Year Growth > P/E; and 5-Year PEG Ratio <1.4" stock screener.  Also, the London Stock Exchange Group rates it as an 8 for their Average Score and 9 for Optimized Score (on a scale of 1 to 10).   

As detailed below, a potential return-on-investment result is +1.1% absolute return-on-investment (equivalent to +39.1% annualized return-on-investment for the next 10 days) if the Amazon.com Inc. share price is in-the-money (i.e. above the $205.00 strike price) and the stock is therefore assigned on its July 3rd, 2025 options expiration date. 

Amazon.com Inc. (AMZN) -- New Covered Call Position

The net debit buy/write limit order was executed as follows:
6/23/2025 Bought 100 shares of Amazon.com stock @ $209.62 per share.  
6/23/2025 Sold 1 AMZN July 3rd, 2025 $205.00 Call option @ $6.80 per share.
Note: this was a simultaneous Buy/Write transaction and the Implied Volatility of the Call was 28.6 when this position was established which, as preferred, is well above the current VIX of 20.2.  

A possible overall performance result (including commissions) if this position is assigned on its 7/03/2025 options expiration date is as follows:
Amazon.com Covered Call Net Investment: $20,282.67
= ($209.62 - $6.80) * 100 shares + $.67 commission

Net Profit Components:
(a) Option Income: +$679.33
= ($6.80 * 100 shares) - $.67 commission
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If Amazon.com stock is above the $205.00 strike price at the July 3rd, 2025 options expiration date): -$462.00
= ($205.00 strike price - $209.62 stock purchase price) * 100 shares

Total Net Profit Potential (If AMZN is in-the-money and therefore assigned at the $205.00 strike price on its 7/03/2025 options expiration date): +$217.33
= (+$679.33 option income + $0.00 dividend income - $462.00 capital appreciation)

Potential Absolute Return-on-Investment: +1.1%
= +$217.33/$20,282.67
Potential Equivalent Annualized-Return-on-Investment: +39.1%
= (+$217.33/$20,282.67) * (365/10 days)  

Established Covered Calls in U.S. Bancorp

A short-term buy/write limit order was entered in U.S. Bancorp (ticker USB) to buy 300 shares and simultaneously sell 3 Call options at the July 11th, 2025 weekly options expiration date and at the $42.00 strike price. The net debit limit price for my order was $41.65 and this order was executed at 12:39pm when 300 shares were purchased at $42.96 and 3 July 11th, 2025 Call options were sold for $1.31 per share.  Therefore, a maximum potential time value profit of $.35 per share = [$1.31 options premium - ($42.96 stock price - $42.00 strike price)] is available for this position.  

This position uses the Covered Calls Advisor's Dividend Capture Strategy since U.S. Bancorp has an upcoming quarterly ex-dividend of $.50 per share on June 30th (one week from today) which is prior to the July 11th options expiration date.  This is equivalent to an absolute annual dividend yield of 4.7% and an equivalent annualized dividend yield of 23.6% = [($.50/$42.96) x (365/18 days to expiration)].  This dividend is included in the detailed return-on-investment calculations below.  Either an early assignment this Friday (the last trading day prior to the 6/30/2025 ex-dividend date) or on the July 11th options expiration date would be desirable to the Covered Calls Advisor given the potential annualized return on investments for either outcome.  Importantly to the Covered Calls Advisor, there is no quarterly earnings report prior to the options expiration date since the next earnings report on July 16th, 2025 is after the July 11th, 2025 options expiration date.

As detailed below, two potential return-on-investment results are: 

•  +0.8% absolute return (equivalent to +43.0% annualized return-on-investment for the next 7 days) if the stock is assigned early (on the last business day prior to the June 30th ex-dividend date); or  

• +2.0% absolute return (equivalent to +41.1% annualized return-on-investment over the next 18 days) if the stock is assigned on the July 11th, 2025 options expiration date.

U.S. Bancorp (USB) -- New Covered Calls Position
The buy/write transaction was:
6/23/2025 Bought 300 U.S. Bancorp shares @ $42.96.
6/23/2025 Sold 3 USB 7/11/2025 $42.00 Call options @ $1.31 per share.
Note: Implied Volatility (IV) of the Call options was at 20.4 when this position was transacted.   
6/30/2025 Upcoming quarterly ex-dividend of $.50 per share.

Two possible overall performance results (including commissions) for this U.S. Bancorp Covered Calls position are as follows:
Covered Calls Net Investment: $12,497.01
= ($42.96 - $1.31) * 300 shares + $2.01 commission

Net Profit Components:
(a) Options Income: +$390.99
= ($1.31 * 300 shares) - $2.01 commission
(b) Dividend Income (If U.S. Bancorp Call options exercised early on June 27th, the last business day prior to the June 30th ex-div date): +$0.00; or
(b) Dividend Income (If U.S. Bancorp stock assigned at the July 11th, 2025 options expiration): +$150.00
= ($.50 dividends per share x 300 shares)

(c) Capital Appreciation (If U.S. Bancorp's Call options assigned early on June 27th): -$288.00

+($42.00 strike price - $42.96 stock purchase price) * 300 shares; or
(c) Capital Appreciation (If shares assigned at $42.00 strike price at the 7/11/2025 options expiration): -$288.00
+($42.00 - $42.96) * 300 shares

1. Total Net Profit [If option exercised early (business day prior to the June 30th ex-dividend date)]: +$102.99

= (+$390.99 options income + $0.00 dividend income - $288.00 capital appreciation); or

2. Total Net Profit (If 300 U.S. Bancorp shares assigned at the $42.00 strike price at the July 11th, 2025 expiration): +$252.99

= (+$390.99 options income + $150.00 dividend income - $288.00 capital appreciation)

1. Potential Absolute Return-on-Investment [If option exercised on business day prior to the 6/30/2025 ex-dividend date]: +0.8%

= +$102.99/$12,497.01

Potential Annualized Return-on-Investment (If option exercised early): +43.0%

= (+$102.99/$12,497.01) * (365/7 days); or

2. Potential Absolute Return-on-Investment (If U.S. Bancorp's shares assigned on the July 11th options expiration date): +2.0%

= +$252.99/$12,497.01

Potential Annualized Return-on-Investment (If 300 U.S. Bancorp shares assigned at $42.00 at the July 11th, 2025 expiration): +41.1%

= (+$252.99/$12,497.01) * (365/18 days)

Covered Calls Position Established in Halozyme Therapeutics Inc.

Today a Covered Calls position was established in Halozyme Therapeutics Inc. (ticker HALO) when four hundred shares were purchased at $52.29 and four July 18th, 2025 Call options were sold at $3.35 per share at the $50.00 strike price. So, the corresponding potential time value (aka extrinsic value) profit potential is $1.06 per share = [$3.30 Call options premium - ($52.29 stock purchase price - $3.35 strike price)].  An in-the-money Covered Calls position was established with the probability that the Calls will be in-the-money and thus the stock would be assigned at $50.00 per share on the options expiration date was 68.5% when this position was established.  Halozyme does not pay a dividend and importantly, their next quarterly earnings report on August 5th, 2025 is after the July 18th, 2025 options expiration date.

A comparison between whether a Covered Calls or a Cash-Secured Puts position would be preferable was made shortly before I entered this order.  The decision was an easy one since the time value for the Calls was substantially higher than that of the comparable Puts.

Halozyme Therapeutics is a small-cap biotechnology company that has a range of auto-injector devices for subcutaneous and intramuscular delivery to patients.  They have license agreements in partnership with several drug companies with 11 currently approved products.  When co-formulated with drugs, their products have the potential to reduce the treatment burden for patients (minutes for subcutaneous injections versus hours for IV infusions).  Also, I am very impressed by the leadership qualities of their CEO Helen Torley, who has done an outstanding job during her decade-long tenure as CEO.

If interested in additional information on Halozyme, their most recent presentation in conjunction with their most recent earnings report for Q1 2025 is here.

  

There are 28 companies that passed all criteria today in my Quality+Value+Growth stock screener.  Halozyme not only was one of these 28 companies, but it also ranked #1 overall among them.  Their outputs from this screener is shown on this chart:  

As detailed below, a potential return-on-investment result is +2.2% absolute return-on-investment (equivalent to +31.4% annualized return-on-investment for the next 25 days) if the Halozyme share price is in-the-money (i.e. above the $50.00 strike price) and the stock is therefore assigned on its July 18th, 2025 options expiration date. 

 

Halozyme Therapeutics Inc. (HALO) -- New Covered Calls Position

The net debit buy/write limit order was executed as follows:

6/23/2025 Bought 400 shares of Halozyme Therapeutics stock @ $52.29 per share.  
6/23/2025 Sold 4 HALO July 18th, 2025 $50.00 Call options @ $3.35 per share.  Note: the Implied Volatility of the Calls was 35.1 when this position was established.  

A possible overall performance results (including commissions) if the position is in-the-money on the options expiration date is as follows:
Halozyme Covered Calls Net Investment: $19,578.68
= ($52.29 - $3.35) * 400 shares + $2.68 commission

Net Profit Components:
(a) Options Income: +$1,337.32
= ($3.35 * 400 shares) - $2.68 commission
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If Halozyme stock is above the $50.00 strike price at the July 18th options expiration date): -$916.00
= ($50.00 strike price - $52.29 stock purchase price) * 400 shares

Potential Total Net Profit (If in-the-money and therefore assigned at expiration): +$421.32
= (+$1,337.32 options income + $0.00 dividend income - $916.00 capital appreciation)

Potential Absolute Return-on-Investment (If stock price is in-the-money and therefore assigned on the 7/18/2025 options expiration date): +2.2% = +$421.32/$19,578.68

Potential Equivalent Annualized-Return-on-Investment: +31.4%
= (+$421.32/$19,578.68) * (365/25 days)

June 20th, 2025 Monthly Options Expiration Results

The Covered Calls Advisor Portfolio had two Covered Calls positions (Nvidia Corporation and Pulte Group Inc.) with June 20th, 2025 monthly options expiration dates and both positions closed with their stock prices in-the-money. The Calls expired yesterday with no remaining value and the Covered Calls were closed out by the stocks being sold at their respective strike prices, so the maximum potential return-on-investment profit was achieved for both positions.  The return-on-investment results for each position is as follows:

1. Nvidia Corporation (NVDA) -- +1.6% absolute return-on-investment (equivalent to +36.6% annualized return-on-investment) for the 16 days of this investment.  This Nvidia Covered Calls position had a $134.00 strike price and it closed at $143.85 yesterday.  The most recent blog post showing the details of this position is here. 

2. Pulte Group Inc. (PHM) -- +1.5% absolute return-on-investment (equivalent to +38.4% annualized return-on-investment) for the 14 days of this investment.  This Pulte position had a $97.00 strike price and it closed at $101.47 yesterday.  The blog post showing the details of this position is here.

As always, I welcome your questions at the email address shown below on any topics related to the Covered Calls investing strategy. 

Jeff Partlow
The Covered Calls Advisor
partlow@cox.net