Established Covered Calls in Nvidia Corporation

This afternoon a Covered Calls position was established in Nvidia Corporation (ticker NVDA).  Nvidia's earnings report yesterday was stellar and their guidance for next quarter was also encouraging.  This morning I established a net buy/write limit order at $130.50 which I thought would be unlikely to be executed today.  But at 1:46pm ET, four hundred shares were purchased at $138.95 and four June 13th, 2025 weekly Call options were sold at the $133.00 strike price at $8.45 per share, which provides a $2.50 per share time value profit potential.  There was a 68.0% probability that the stock will be in-the-money on its 6/13/2025 options expiration date.

Because of my continuing bullish outlook on Nvidia's potential growth in both revenue and earnings, this position continues my recent practice of establishing short-term in-the-money Covered Calls positions in Nvidia. I prefer short-term (less than 30 days duration) positions since: (1) the potential annualized return-on-investment is higher for shorter-duration positions; and (2) short-term positions provide us a more frequent opportunity to re-evaluate the existing positions, so we can react quickly if negative news causes a significant stock price decline. 

 

As detailed below, a potential return-on-investment result is +1.9% absolute return-on-investment (equivalent to +46.5% annualized return-on-investment for the next 15 days) if the Nvidia share price is in-the-money (i.e. above the $133.00 strike price) and therefore assigned on its June 13th, 2025 options expiration date.  

Nvidia Corporation (NVDA) -- New Covered Calls Position

Today's buy/write net limit order transaction was as follows:
5/29/2025 Bought 400 Nvidia Corporation shares at $138.95.

5/29/2025 Sold 4 NVDA 6/13/2025 $133.00 Call options @ $8.45 per share.  The Implied Volatility of these Calls was 43.2% when this position was established.  

A possible overall performance result (including commissions) for this Nvidia Corporation Covered Calls position is as follows:
Covered Calls Net Investment: $52,202.68
= ($138.95 - $8.45) * 400 shares + $2.68 commission

Net Profit:
(a) Options Income: +$3,377.32
= ($8.45 * 400 shares) - $2.68 commission
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If 400 Nvidia shares assigned at the $133.00 strike price at expiration): -$2,380.00
+($133.00 strike price - $138.95 stock purchase price) * 400 shares

Total Net Profit Potential (If 400 Nvidia shares in-the-money and therefore assigned at the $133.00 strike price at the options expiration date): +$997.32
= (+$3,377.32 options income + $0.00 dividend income - $2,380.00 capital appreciation)

Potential Absolute Return-on-Investment: +1.9%
= +$997.32/$52,202.68
Potential Annualized Return-on-Investment: +46.5%
= (+$997.32/$52,202.68) * (365/15 days)