June 6th, 2025 Weekly Options Expiration Results

One of the many appealing features of the Covered Calls investing strategy is that we can easily calculate the potential return-on-investment (roi) results if the stock price were to close on the options expiration date at any possible price.  For example, I always make this calculation for the circumstance if the stock were to be in-the-money (i.e. above the Call option's strike price) on its options expiration date.  For any option chain that I am considering, this calculation provides me with the maximum potential return-on-investment result for any Covered Calls position I am contemplating establishing, and it does this in advance (i.e. before) I enter the trade. Using Schwab's Think or Swim platform I also look at the real-time probability that any particular Call option chain I'm evaluating will be assigned (i.e. close in-the-money) on its options expiration date.  Knowing both the risk (probability %) and reward (return-on-investment) for any specific Covered Calls position just prior to making a Covered Calls investment is invaluable for making decisions that are consistent with my personal risk tolerance profile.

Furthermore, since Covered Calls and 100% Cash-Secured Puts are synthetically equivalent strategies, just prior to entering the trade order, we should also evaluate whether a Covered Calls or a Cash-Secured Puts order would be preferable.  This is easily done by comparing the time value (i.e. extrinsic value) of the comparable Calls or Puts position to determine which one has a higher value and therefore a higher potential return-on-investment.  In recent history, Calls have normally had the higher time value which is why I almost always choose to enter Covered Calls orders (even when the circumstance occurs that the time value between comparable Calls and Puts are basically equal).      

The Covered Calls Advisor Portfolio had two Covered Calls positions with June 6th, 2025 weekly options expirations.  Both positions closed on this options expiration date yesterday with their stock prices well in-the-money (i.e. above the strike price), so the Calls expired with no remaining value and the Covered Calls were closed out with the stocks sold at their respective strike prices; and their maximum potential return-on-investment results on the options expiration date were achieved.  A summary of the return-on-investment results for these positions are as follows:

1. T-Mobile US Inc. (TMUS) -- +1.4% absolute return-on-investment (equivalent to +30.8% annualized return-on-investment) for the 16 days of this investment.  This T-Mobile position had a $232.50 strike price and it closed at $245.86 yesterday.  The blog post showing the details of this position on the day the position was originally established is here. 

2. UnitedHealth Group Inc. (UNH) -- +2.5% absolute return-on-investment (equivalent to +64.1% annualized return-on-investment) for the 14 days of this investment.  This UnitedHealth Group position had a $280.00 strike price and it closed yesterday at $303.22.  The blog post showing the details of this position on the day the position was originally established is here.

To read some of my prior posts related to my decision-making processes for Covered Calls investing, click on the "Covered Calls Processes" link shown in the "Categories" section in the right sidebar of the homepage (which is here).  One posted article there that readers have found especially helpful and that you might begin with titled "Exploiting Our Covered Calls Investing "Edges"' is here.  

As always, I encourage you to email any of your comments or questions related to the Covered Calls investing strategy to the email address shown below. 

Jeff Partlow
The Covered Calls Advisor
partlow@cox.net

Established Covered Calls Position in Pulte Group Inc.

A short-term buy/write limit order in Pulte Group Inc. (ticker PHM) was executed this afternoon at the Covered Calls Advisor's net debit price of $95.75 per share. Two hundred shares were purchased at $100.60 and two June 20th, 2025 Call options were sold for $4.85 per share at the $97.00 strike price, a time value profit potential of $1.25 = [$4.85 options premium - ($100.60 stock price - $97.00 strike price)] per share.  This position is in-the-money since the probability that the position will be in-the-money on its June 20th options expiration date was 70.4% when this transaction was executed today.  The probability that this position will expire in-the-money on the 6/20/2025 options expiration date was 70.4% when this position was established.  Also, the next quarterly earnings report on July 22nd, 2025 is after this month's June 20th options expiration date.  

This position uses the Covered Calls Advisor's Dividend Capture Strategy (see here).  Pulte has an upcoming quarterly ex-dividend of $.22 per share that goes ex-dividend on June 17th, 2025 which is prior to the June 20th, 2025 options expiration date.  This dividend increases the potential annualized return-on-investment results (compared with a similar position without a dividend capture potential) and the dividend is included in the detailed potential return-on-investment calculations shown below.  Either an early assignment on the last business day prior to the ex-dividend date or on the June 20th, 2025 options expiration date would be a desirable result given the annualized return-on-investment potential upon assignment for either outcome. 

As shown in my S&P 500 Price Potential stock screener results below, Pulte Group achieves every criteria.  

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

•  +1.3% absolute return (equivalent to +43.1% annualized return-on-investment for the next 11 days) if the stock is assigned early (the last business day prior to the June 17th ex-dividend date); OR 

• +1.5% absolute return (equivalent to +38.4% annualized return over the next 14 days) if the stock is assigned on the June 20th, 2025 options expiration date.

Pulte Group Inc. (PHM) -- New Covered Calls Position
The simultaneous buy/write transaction was:
6/6/2025 Bought 200 Pulte Group Inc. shares @ $100.60.
6/6/2025 Sold 2 Pulte 6/20/2025 $97.00 Call options @ $4.85 per share.
Note: the Implied Volatility of the Call options was 33.6 when this position was established.
6/17/2025 Upcoming quarterly ex-dividend of $.22 per share.

Two possible overall performance results (including commissions) for this Pulte Group Covered Calls position are as follows:
Covered Calls Cost Basis: $19,151.34
= ($100.60 - $4.85) * 200 shares + $1.34 commission

Net Profit Components:
(a) Options Income: +$968.66
= ($4.85 * 200 shares) - $1.34 commission
(b) Dividend Income (If options exercised early on June 16th, the last business day prior to the June 17th, 2025 ex-div date): +$0.00; or
(b) Dividend Income (If Pulte stock assigned on the June 20th, 2025 options expiration -- so the dividend is captured): +$44.00
= ($.22 dividend per share x 200 shares)

(c) Capital Appreciation (If Pulte Call options assigned early on June 17th): -$720.00
+($97.00 - $100.60) * 200 shares; or
(c) Capital Appreciation (If shares assigned at $97.00 strike price at options expiration): -$720.00
+($97.00 - $100.60) * 200 shares

1. Total Net Profit (If options exercised early): +$248.66

= (+$968.66 options income + $0.00 dividend income - $720.00 capital appreciation); or

2. Total Net Profit (If Pulte shares assigned at $97.00 at the June 20th, 2025 expiration): +$292.66

= (+$968.66 options income + $44.00 dividend income - $720.00 capital appreciation)

1. Absolute Return-on-Investment [If option exercised on business day prior to the June 17th ex-dividend date]: +1.3%

= +$248.66/$19,151.34

Annualized Return-on-Investment (If option exercised early): +43.1%

= (+$248.66/$19,151.34) * (365/11 days); or

2. Absolute Return-on-Investment (If Pulte shares assigned on the June 20th, 2025 options expiration date): +1.5%

= +$292.66/$19,849.34

Annualized Return-on-Investment (If Pulte shares assigned at $97.00 at the June 20th, 2025 expiration): +38.4%

= (+$292.66/$19,849.34) * (365/14 days)

Either outcome would provide a good return-on-investment result for this Pulte Group Covered Calls investment.  These returns will be achieved as long as the stock is above the $97.00 strike price at assignment.  However, if the stock declines below the strike price, a breakeven price of $95.53 = ($100.60 stock price - $4.85 Call options price - $.22 dividend) provides 5.0% downside protection below today's stock purchase price.

At least eight of the nine metrics used in the Covered Calls Advisor's Dividend Capture Strategy spreadsheet must be 'YES' prior to establishing a position.  As shown below with this Pulte Group position, all nine criteria are met.

Early Assignment of Covered Calls Position in Bank of America Corporation

I was notified by Schwab via email early this morning that the five Bank of America Corporation (ticker BAC) June 13th, 2025 Call options were exercised yesterday.  BofA's stock price increased slightly from $43.88 when this position was established to $44.12 at yesterday's market close, the original $.24 time value in the Calls when the position was established had declined on yesterday's market closer to $0.00.  So, with seven days remaining until the June 13th options expiration date, the owner of these Calls exercised their option to buy the 500 shares at the $42.50 strike price in order to receive today's $.26 per share ex-dividend.  Although I will not receive the ex-dividend, I am pleased with the +33.7% annualized-return-on-investment (aroi) result achieved since it slightly exceeds the maximum aroi that might have been achieved if this position instead remained in-the-money and would therefore be assigned on next Friday's (June 13th, 2025) options expiration date.   

The post when this Bank of America Corp. Covered Calls position was originally established is here.  As detailed below, the return-on-investment result for this Bank of America Covered Calls position was +0.6% absolute return in 7 days (equivalent to a +33.7% annualized return-on-investment).

Bank of America Corporation (BAC) -- Covered Calls Position Closed by Early Assignment

The buy/write transaction was as follows:
5/30/2025 Bought 500 shares of Bank of America Corp. stock @ $43.88 per share 
5/30/2025 Sold 5 BAC June 13th, 2025 $42.50 Call options @ $1.66 per share
Note: The Implied Volatility of these Calls was 23.3 when this position was established.
6/6/2023 Five Bank of America Calls were exercised on the last business day prior to their June 6th, 2025 ex-dividend date, so the Call options expired and the 500 Bank of America shares were sold at the $42.50 strike price.

The overall performance results (including commissions) are as follows:
Covered Calls Cost Basis: $21,113.35
= ($43.88 - $1.66) * 500 shares + $3.35 commission

Net Profit Components:
(a) Options Income: +$826.65
= ($1.66 * 500 shares) - $3.35 commission
(b) Dividend Income (500 shares assigned on 6/5/2025, the last business day prior to the 6/6/2025 ex-dividend date): = +$0.00
(c) Capital Appreciation (BAC shares assigned early on 6/5/2025): -$690.00
= ($42.50 strike price - $43.88 stock purchase price) * 500 shares

Net Profit (Bank of America shares assigned on 6/5/2025, the day prior to the June 6th ex-dividend date): +$136.65
= (+$826.65 options income + $0.00 dividend income - $690.00 capital appreciation)

Absolute Return-on-Investment: +0.6%
= +$136.65/$21,113.35
Annualized Return-on-Investment: +33.7%
= (+$136.65/$21,113.35) * (365/7 days)

Early Assignment of Covered Call Position in Home Depot Inc.

I was notified by Schwab via email early this morning that the one Home Depot Inc. (ticker HD) June 13th, 2025 Call option was exercised yesterday.  Despite the fact that the stock price has increased only very slightly (from $369.71 purchase price to $370.10 at yesterday's market close), the original Call option time value has decreased from the original $3.50 time value in the Call option when the position was established to only about $.25 at yesterday's market close.  So, with eight days remaining until the June 13th options expiration date, the owner of this Call exercised their option to buy the 100 shares at the $362.50 strike price in order to receive today's $2.30 per share ex-dividend.  Although I will not receive the ex-dividend, I am pleased with the +44.4% annualized-return-on-investment (aroi) result achieved since it exceeds the maximum +36.8% aroi that might have been achieved if this position instead remained in-the-money and would therefore be assigned on its June 13th, 2025 options expiration date.   

The post when this Home Depot Inc. Covered Call position was originally established is here.  As detailed below, the return-on-investment result for this Home Depot Covered Call position was +1.0% absolute return in 8 days (equivalent to a +44.4% annualized return-on-investment).

Home Depot Inc. (C) -- Covered Call Position Closed by Early Assignment

The simultaneous buy/write transaction was:
4/16/2025 Bought 100 Home Depot Inc. shares @ $369.71.
4/16/2025 Sold 1 Home Depot 6/13/2025 $362.50 Call option @ $10.71 per share.
6/5/2025 One Home Depot Call was exercised on the last business day prior to its June 5th, 2025 ex-dividend date, so the Call expired and the 100 Home Depot shares were sold at the $362.50 strike price.

The overall performance result (including commissions) for this Home Depot Covered Call position is as follows:
Covered Calls Cost Basis: $35,900.67
= ($369.71 - $10.71) * 100 shares + $.67 commission

Net Profit Components:
(a) Option Income: +$1,070.33
= ($10.71 * 100 shares) - $.67 commission
(b) Dividend Income (HD Call option exercised early on June 4th, 2025, the business day prior to the June 5th ex-div date): +$0.00

(c) Capital Appreciation (Early Assignment): -$721.00
+($362.50 strike price - $369.71 stock purchase price) * 100 shares

Total Net Profit: +$349.33

= (+$1,070.33 option income + $0.00 dividend income - $721.00 capital appreciation)

Absolute Return-on-Investment: +1.0%

= +$349.33/$35,900.67

Annualized Return-on-Investment: +44.4%

= (+$349.33/$35,900.67) * (365/8 days)