Established Covered Calls in BorgWarner Inc.

Early this afternoon, a new Covered Calls position was established in BorgWarner Inc. (ticker BWA) with an April 16th, 2021 options expiration date.   A buy/write transaction entered at a net debit of $44.34 was executed by purchasing 300 shares of BorgWarner Inc. at $45.63 and simultaneously selling three April 16th, 2021 Call options at the $45.00 strike price at $1.29 per share. The corresponding time value when this Covered Calls position was established was $.66 per share = [$1.29 Call options price - ($45.63 stock price - $45.00 strike price)].  Given the Covered Calls Advisor's current cautious outlook, an in-the-money Covered Calls position was established.  The Delta was 62.2 which approximates a probability of 62.2% that the Call options will be in-the-money and therefore the stock assigned (i.e. sold) on the options expiration date. The Implied Volatility of these Calls was 28.2 today when this transaction was executed.

As detailed below, the potential return-on-investment result is +1.5% absolute return in 10 days (equivalent to a +54.3% annualized return-on-investment) if the stock is in-the-money at closing on the options expiration date.  The approximate Expected Value annualized return-on-investment was +33.8% (+54.3% x 62.2%) at the time this position was established.  

BorgWarner Inc. (BWA) -- New Covered Calls Position

The Buy/Write transaction was as follows:
04/07/2021 Bought 300 shares of BorgWarner Inc. stock @ $45.63 per share 
04/07/2021 Sold 3 BWA April 16th, 2021 $45.00 Call options @ $1.29 per share

A possible overall performance result (including commissions) if the stock price is above the $45.00 strike price at expiration would be as follows:
Covered Call Cost Basis: $13,304.01
= ($45.63 - $1.29) * 300 shares + $2.01 commission

Net Profit Components:
(a) Options Income: +$387.00
= ($1.29 * 300 shares)
(b) Dividend Income: +$0.00 
(c) Capital Appreciation (If BorgWarner stock is above $45.00 strike price at the April 16th, 2021 options expiration): -$189.00
= ($45.00 - $45.63) * 300 shares

Total Net Profit: +$198.00
= (+$387.00 options income +$0.00 dividend income -$189.00 capital appreciation)

Absolute Return: +1.5%
= +$198.00/$13,304.01
Equivalent Annualized Return: +54.3%
= (+$198.00/$13,304.01)*(365/10 days)

The downside 'breakeven price' at expiration is at $44.34 ($45.63 - $1.29), which is 2.8% below the current market price of $45.63.