Established Covered Calls in Nvidia Corporation

Early this afternoon a Covered Calls position was established in Nvidia Corporation (ticker NVDA). Three hundred shares were purchased at $134.61 and three January 31st, 2025 weekly Call options were sold at the $130.00 strike price at $7.25 per share--a buy/write net debit amount of $127.36 per share which provides a $2.64 per share time value profit potential.  A Covered Calls position was established instead of a 100% Cash-Secured Puts position since the maximum time value profit potential of $2.64 per share for the Covered Calls exceeds the $2.36 per share time value available for the Puts when this position was established. 

As detailed below, a potential return-on-investment result is +2.1% absolute return-on-investment (equivalent to +50.3% annualized return-on-investment for the next 15 days) if the Nvidia share price is in-the-money (i.e. above the $130.00 strike price) and therefore assigned on its Jan. 31st, 2025 options expiration date.  The probability this outcome will be achieved was 65.4% when this position was established.

 
Nvidia Corporation (NVDA) -- New Covered Calls Position

The buy/write market order transaction was as follows:
1/16/2025 Bought 300 Nvidia Corporation shares at $134.61.

1/16/2025 Sold 3 NVDA 1/31/2025 $130.00 Call options @ $7.25 per share.  The Implied Volatility of the Calls was 39.9 when these Calls were sold.

A possible overall performance result (including commissions) for this Nvidia Corporation Covered Calls position is as follows:
Covered Calls Net Investment: $38,210.01
= ($134.61 - $7.25) * 300 shares + $2.01 commission

Net Profit:
(a) Options Income: +$2,172.99
= ($7.25 * 300 shares) - $2.01 commission
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If 300 Nvidia shares assigned at the $130.00 strike price at expiration): -$1,383.00
+($130.00 strike price - $134.61 stock purchase price) * 300 shares

Total Net Profit Potential (If 300 Nvidia shares in-the-money and therefore assigned at the $130.00 strike price at the options expiration date): +$789.99
= (+$2,172.99 options income + $0.00 dividend income - $1,383.00 capital appreciation)

Potential Absolute Return-on-Investment: +2.1%
= +$789.99/$38,210.01
Potential Annualized Return-on-Investment: +50.3%
= (+$789.99/$38,210.01) * (365/15 days)