Established Covered Calls Position in Applied Materials Inc.

A Covered Calls position was established in Applied Materials Inc. (ticker AMAT) with an April 30th, 2021 options expiration date.   A buy/write transaction entered at a net debit of $123.18 was executed by purchasing 300 shares of AMAT at $129.45 and simultaneously selling three April 30th, 2021 Call options at the $125.00 strike price at $6.27 per share. The time value when this Covered Calls position was established was $1.82 per share = [$6.27 Call options price - ($129.45 stock price - $125.00 strike price)].  Given the Covered Calls Advisor's current cautious outlook, a moderately in-the-money Covered Calls position was established.  The Delta was 69.9 which approximates a probability of 69.9% 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 39.0 today when this transaction was executed.

As detailed below, the potential return-on-investment result is +1.5% absolute return in 12 days (equivalent to a +45.0% annualized return-on-investment).  

Applied Materials Inc. -- New Covered Calls Position Established
The buy/write transaction was:
04/19/2021 Bought 300 AMAT shares @ $129.45
04/19/2021 Sold 3 AMAT April 30th, 2021 $125.00 Call options @ $6.27
Note: the Open Interest in the Calls was 212 contracts.

A possible overall performance result (including commissions) for this Applied Materials Covered Calls position is as follows:
Covered Calls Position Cost Basis: $36,896.01
= ($129.45 stock price -$6.27 options price) *300 shares +$2.01 commissions

Net Profit:
(a) Options Income: +$1,881.00
= ($6.27 * 300 shares)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If AMAT assigned at $125.00 strike price at April 30th options expiration): -$1,335.00
= ($125.00-$129.45) * 300 shares

Total Net Profit (If AMAT assigned at $125.00 at options expiration): +$546.00

= (+$1,881.00 options income +$0.00 dividend income -$1,335.00 capital appreciation)

Absolute Return: +1.5%

= +$546.00/$36,896.01

Annualized Return: +45.0%

= (+$546.00/$36,896.01)*(365/12 days)

These returns will be achieved as long as the stock is above the $125.00 strike price at expiration.  If the stock declines below the strike price, the breakeven price of $123.18 ($129.45 -$6.27) provides 4.8% downside protection.