Search This Blog

Thursday, July 17, 2025

Covered Calls Position Established in Amazon.com Inc.

This morning my buy/write net debit limit order was executed at a price of $209.28 when 200 shares of Amazon.com Inc. (ticker symbol AMZN) stock were purchased at $223.60 and 2 August 1st, 2025 $212.50 Call options were sold at $14.32 per share.  So the potential time value profit if the stock is in-the-money and therefore closed out by assignment on the options expiration date is $3.22 per share [$14.32 Call options premium - ($223.60 stock purchase price - $212.50 strike price)].  The probability that the Calls will be above the $212.50 strike price on the 8/1/2025 options expiration date when this Covered Calls position was established was 72.2%.

Amazon.com Inc. (AMZN) -- New Covered Calls Position
The net debit buy/write limit order was executed as follows:
7/17/2025 Bought 200 shares of Amazon.com stock @ $223.60 per share.  
7/17/2025 Sold 2 AMZN August 1st, 2025 $212.50 Call options @ $14.32 per share.
Note: this was a simultaneous Buy/Write transaction and the Implied Volatility of the Calls was 40.5 when this position was established which, as preferred, is well above the current VIX of 16.8.  

A possible overall performance result (including commissions) if this position is assigned on its 8/1/2025 options expiration date is as follows:
Covered Calls Net Investment: $41,857.34
= ($223.60 - $14.32) * 200 shares + $1.34 commission

Net Profit Components:
(a) Options Income: +$2,862.66
= ($14.32 * 200 shares) - $1.34 commission
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If Amazon.com stock is above the $212.50 strike price at the August 1st, 2025 options expiration date): -$2,220.00
= ($212.50 strike price - $223.60 stock purchase price) * 200 shares

Total Net Profit Potential (If assigned at the $212.50 strike price on the Aug. 1st options expiration date): +$642.66
= (+$2,862.66 options income + $0.00 dividend income - $2,220.00 capital appreciation)

Potential Absolute Return-on-Investment: +1.5%
= +$642.66/$41,857.34
Potential Equivalent Annualized-Return-on-Investment: +37.4%
= (
+$642.66/$41,857.34) * (365/15 days)