This position uses the Covered Calls Advisor's Dividend Capture Strategy since U.S. Bancorp has an upcoming quarterly ex-dividend of $.50 per share on June 30th (one week from today) which is prior to the July 11th options expiration date. This is equivalent to an absolute annual dividend yield of 4.7% and an equivalent annualized dividend yield of 23.6% = [($.50/$42.96) x (365/18 days to expiration)]. This dividend is included in the detailed return-on-investment calculations below. Either an early assignment this Friday (the last trading day prior to the 6/30/2025 ex-dividend date) or on the July 11th options expiration date would be desirable to the Covered Calls Advisor given the potential annualized return on investments for either outcome. Importantly to the Covered Calls Advisor, there is no quarterly earnings report prior to the options expiration date since the next earnings report on July 16th, 2025 is after the July 11th, 2025 options expiration date.
As detailed below, two potential return-on-investment results are:
- +0.8% absolute return (equivalent to +43.0% annualized return-on-investment for the next 7 days) if the stock is assigned early (on the last business day prior to the June 30th ex-dividend date); or
- +2.0% absolute return (equivalent to +41.1% annualized return-on-investment over the next 18 days) if the stock is assigned on the July 11th, 2025 options expiration date.
The buy/write transaction was:
6/23/2025 Bought 300 U.S. Bancorp shares @ $42.96.
6/23/2025 Sold 3 USB 7/11/2025 $42.00 Call options @ $1.31 per share.
Note: Implied Volatility (IV) of the Call options was at 20.4 when this position was transacted.
6/30/2025 Upcoming quarterly ex-dividend of $.50 per share.
Two possible overall performance results (including commissions) for this U.S. Bancorp Covered Calls position are as follows:
Covered Calls Net Investment: $12,497.01
= ($42.96 - $1.31) * 300 shares + $2.01 commission
Net Profit Components:
(a) Options Income: +$390.99
= ($1.31 * 300 shares) - $2.01 commission
(b) Dividend Income (If U.S. Bancorp Call options exercised early on June 27th, the last business day prior to the June 30th ex-div date): +$0.00; or
(b) Dividend Income (If U.S. Bancorp stock assigned at the July 11th, 2025 options expiration): +$150.00
= ($.50 dividends per share x 300 shares)
(c) Capital Appreciation (If U.S. Bancorp's Call options assigned early on June 27th): -$288.00
+($42.00 strike price - $42.96 stock purchase price) * 300 shares; or(c) Capital Appreciation (If shares assigned at $42.00 strike price at the 7/11/2025 options expiration): -$288.00
+($42.00 - $42.96) * 300 shares
1. Total Net Profit [If option exercised early (business day prior to the June 30th ex-dividend date)]: +$102.99
= (+$390.99 options income + $0.00 dividend income - $288.00 capital appreciation); or
2. Total Net Profit (If 300 U.S. Bancorp shares assigned at the $42.00 strike price at the July 11th, 2025 expiration): +$252.99
= (+$390.99 options income + $150.00 dividend income - $288.00 capital appreciation)
1. Potential Absolute Return-on-Investment [If option exercised on business day prior to the 6/30/2025 ex-dividend date]: +0.8%
= +$102.99/$12,497.01
Potential Annualized Return-on-Investment (If option exercised early): +43.0%
= (+$102.99/$12,497.01) * (365/7 days); or
2. Potential Absolute Return-on-Investment (If U.S. Bancorp's shares assigned on the July 11th options expiration date): +2.0%
= +$252.99/$12,497.01
Potential Annualized Return-on-Investment (If 300 U.S. Bancorp shares assigned at $42.00 at the July 11th, 2025 expiration): +41.1%
= (+$252.99/$12,497.01) * (365/18 days)
