Today, a Covered Calls position was established in Intel Corporation (ticker symbol INTC) with a February 16th, 2018 expiration and at the $47.50 strike price. This position has an upcoming quarterly ex-dividend on Feb 6th of $.30 per share, so the potential return for this position, as detailed below, includes the possibility of early exercise because the ex-dividend is prior to the Feb 16th, 2018 options expiration date. Quarterly earnings were just reported last week, so the next earnings report will not be until late April. Given the Covered Calls Advisor's current Overall Market Meter indicator of Neutral, a slightly in-the-money Covered Calls position was established.
As detailed below, a potential return-on-investment result is +0.6% absolute return (equivalent to +32.1% annualized
return for the next 7 days) if the stock is assigned early (business day
prior to February 6th ex-date); OR +1.3%
absolute return (equivalent to +25.4% annualized return over the next 18
days) if the stock is assigned on the February 16th options expiration date.
Intel Corporation (INTC) -- New Covered Calls Position
The transactions were:
01/30/2018 Bought 400 Intel shares @ $49.23
01/30/2018 Sold 4 Intel 02/16/2018 $47.50 Call options @ $2.04
Note: a simultaneous buy/write transaction was executed.
02/06/2018 Upcoming quarterly ex-dividend of $.30 per share
Two possible overall performance results (including commissions) for this Intel Covered Calls position are as follows:
Covered Calls Cost Basis: $18,880.95
= ($49.23 - $2.04) *400 + $4.95 commission
Net Profit Components:
(a) Options Income: +$813.32
= ($2.04*400 shares) - $2.68 commissions
(b) Dividend Income (If option exercised early on Feb 5th, the business day prior to Feb 6th ex-div date): +$0.00; or
(b) Dividend Income (If INTC assigned at Feb 16th, 2018 expiration): +$120.00
= ($.30 dividend per share x 400 shares)
outcome provides a good return-on-investment result for this
investment. These returns will be achieved as long as the stock is
above the $47.50 strike price at assignment. If the stock declines
below the strike price, the breakeven price of $46.89 ($49.23 -$2.04 -$.30)
provides 4.8% downside protection below today's purchase
The Covered Calls Advisor has established a set of eleven criteria to evaluate potential covered calls using a dividend capture strategy. The minimum threshold desired to establish a position is that at least nine of these eleven criteria must be achieved. As shown in the table below, all of the eleven criteria are achieved for this Intel position.