The Covered Calls Advisor Portfolio has a Covered Calls position in Nvidia Corporation (ticker NVDA) which expired last Friday with the stock at $111.01 which was below the $115.00 strike price.
Today this position was continued by rolling out to the May 16th, 2025 monthly options expiration at the same $115.00 strike price by selling-to-open three Calls at $4.10 per share when Nvidia's stock price was $113.99.
As detailed below, a potential outcome for this Nvidia investment if the stock is in-the-money and therefore assigned on the options expiration date is +6.0% absolute return-on-investment over 53 days (equivalent to +41.3% annualized-return-on-investment) if the stock closes above the $115.00 strike price on the 5/16/2025 options expiration date. This position demonstrates that by selling in-the-money strike prices, the Calls premium income received can overcome a significant 4.5% stock price decline from its original stock purchase price and still achieve a very positive return-on-investment outcome. The details showing this potential return-on-investment result are as follows:
Nvidia Corporation (NVDA) -- Continuation of Covered Calls Position
The buy/write net limit order transaction was as follows:
3/24/2025 Bought 300 Nvidia Corporation shares at $120.39.
3/24/2025 Sold 3 NVDA 4/11/2025 $120.00 Call options @ $4.88 per share. The Implied Volatility of the Calls was 49.9 when these Calls were sold.
4/11/2025 Three hundred Nvidia shares closed below the $120.00 strike price at $110.71, so the three Call options expired and the 300 Nvidia shares remain in the Covered Calls Advisor Portfolio.
4/14/2025 Continued this Nvidia Corporation Covered Calls position by selling 3 April 25th, 2025 $115.00 Calls at $3.35 per share when the stock was trading at $112.24 per share.
4/25/2025 Three hundred Nvidia shares closed below the $115.00 strike price at $111.01, so the three Call options expired and the 300 Nvidia shares remain in the Covered Calls Advisor Portfolio.
5/1/2025 Continued this Nvidia Corporation Covered Calls position by selling 3 May 16th, 2025 $115.00 Calls at $4.10 per share when the stock was trading at $113.99 per share.
A possible overall performance result (including commissions) for this Nvidia Corp. Covered Calls position if the stock is in-the-money (i.e. above the $115.00 strike price) on its 5/16/2025 options expiration date is as follows:
Covered Calls Net Investment: $34,655.01
= ($120.39 - $4.88) * 300 shares + $2.01 commission
Net Profit:
(a) Options Income: +$3,692.97
= ($4.88 + $3.35 + $4.10) * 300 shares - $6.03 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If 300 Nvidia shares assigned at the $115.00 strike price on its 5/16/2025 options expiration date): -$1,617.00
+($115.00 strike price - $120.39 stock purchase price) * 300 shares
Total Net Profit Potential (If 300 Nvidia shares in-the-money and therefore assigned at the $115.00 strike price at the 5/16/2025 options expiration date): +$847.98
= (+$3,692.97 options income + $0.00 dividend income - $1,617.00 capital appreciation)
Potential Absolute Return-on-Investment: +6.0%
= +$2,075.97/$34,655.01
Potential Annualized Return-on-Investment: +41.3%
= (+$2,075.97/$34,655.01) * (365/53 days)
