Applied Materials Inc. -- New Covered Calls Position Established
The transactions were:
08/25/2017 Bought 500 AMAT shares @ $43.38
08/25/2017 Sold 5 AMAT Sept 15, 2017 $43.00 Call options @ $1.28
Note: a simultaneous buy/write transaction was executed.
A possible overall performance result (including commissions) for this Applied Materials covered calls position is as follows:
Covered Calls Position Cost Basis: $21,058.30
= ($43.38 stock price -$1.28 options price) *500 shares +$8.30 commissions
(a) Options Income: +$640.00
= ($1.28*500 shares)
(b) Dividend Income: +$0.00
Total Net Profit (If AMAT assigned at $43.00 at options expiration): +$445.05
These returns will be achieved as long as the stock is above the $43.00 strike price at expiration. If the stock declines below the strike price, the breakeven price of $42.10 ($43.38 -$1.28) provides 3.0% downside protection.