As preferred by the Covered Calls Advisor, Cigna's next quarterly earnings report on November 2nd, 2023 will be after the September 15th options expiration date. Given the Covered Calls Advisor's current Overall Market Meter indicator of Neutral, a slightly in-the-money Covered Call position was established with a Delta of 68.7 was selected since it meets my current minimum annualized return-on-investment criteria of +25.0%. Cigna is currently at an attractive valuation. In addition, it appears in two of my multifactor stock screeners: (1) StockRover Overall; and (2) Shareholder Yield.
As detailed below, a potential return-on-investment result is +1.2%
absolute return-on-investment (equivalent to +30.1% annualized return-on-investment over the next 14 days) if the stock is assigned on the September 15th, 2023 options expiration date.
The buy/write transaction today was as follows:
9/1/2023 Bought 100 Cigna Corp. shares @ $277.11
9/1/2023 Sold 1 Cigna 9/15/2023 $272.50 Call option @ $6.51
9/5/2023 Upcoming quarterly ex-dividend of $1.23 per share
The overall performance results (including commissions) for this Cigna Covered Call position if the stock is in-the-money at the 9/15/2023 options expiration are as follows:
Covered Call Cost Basis: $27,060.67
= ($277.11 - $6.51) * 100 shares + $.67 commissions
Net Profit Components:
(a) Options Income: +$650.33
= ($6.51 * 100 shares) - $.67 commissions
(b) Dividend Income (If Cigna shares assigned at the Sept 15th, 2023 options expiration): +$123.00
= ($1.23 dividend per share x 100 shares)
(c) Capital Appreciation (If Cigna shares assigned at the $272.50 strike price at options expiration): -$461.00
+($272.50 - $277.11) * 100 shares
