This morning a short-term Covered Calls position was established in Wheaton Precious Metals (ticker symbol WPM) when two hundred WPM shares were purchased at $93.59 and two August 22nd, 2025 weekly Call
options were sold for $2.55 per share at the $92.00 strike price. The
net debit limit order at $91.04 was executed, so the potential time value profit was $.96 per share [$2.55 Call options premium - ($93.59 stock purchase price -
$92.00 strike price)]. There is an upcoming quarterly ex-dividend of $.165 per share (annual dividend yield of 0.7%) next Thursday which is the day prior to the August 22nd options expiration date. So, potential return-on-investment results for this position, as detailed below, include the possibility of early assignment because the ex-dividend is prior to the August 22nd, 2025 options expiration date. As preferred by the Covered Calls Advisor, the next quarterly earnings report on November 6th, 2025 is after the options expiration date. An in-the-money Covered Calls position was established with the probability that the Calls will be in-the-money and therefore assigned on the options expiration date was 63.8%.
As detailed below, a potential return-on-investment result is +1.1% absolute return (equivalent to +64.1% annualized
return-on-investment for the next 6 days) if the stock is assigned early next Thursday (the last business day
prior to next Friday's August 22nd ex-dividend date); OR +1.2%
absolute return (equivalent to +64.4% annualized return-on-investment over the next 7 days) if the stock is assigned on the August 22nd, 2025 options expiration date.
Wheaton Precious Metals (WPM) -- New Covered Calls Position
The buy/write transaction was:
8/15/2025 Bought 200 Wheaton Precious Metals shares @ $93.59
8/15/2025 Sold 2 WPM 8/22/2025 $92.00 Call options @ $2.55
Note: The Implied Volatility of the Call options was 31.3 when this Covered Calls position was established (which as preferred is well above the 14.8 of the S&P 500 Volatility Index--VIX).
8/21/2025 Upcoming quarterly ex-dividend of $.165 per share
Two possible overall performance results (including commissions) for this Wheaton Precious Metals Covered Calls position are as follows:
Covered Calls Cost Basis: $18,209.34
= ($93.59 - $2.55) * 200 shares + $1.34 commissions
Net Profit Components:
(a) Options Income: +$510.00
= ($2.55 * 200 shares)
(b) Dividend Income (If option exercised early on the last business day prior to the August 21st ex-div date): +$0.00; or
(b) Dividend Income (If Wheaton Precious Metals shares assigned at the August 22nd, 2025 expiration): +$33.00
= ($.165 dividend per share x 200 shares)
(c) Capital Appreciation (If WPM assigned early on August 21st, 2025): -$318.00
+($92.00 strike price - $93.59 stock purchase price) * 200 shares ;or
(c) Capital Appreciation (If WPM assigned at the $92.00 strike price at the August 22nd, 2025 options expiration): -$318.00
+($92.00 - $93.59) * 200 shares
1. Total Net Profit [If option exercised early on August 20th (last business day prior to the August 21st ex-dividend date)]: +$192.00
= (+$510.00 options income + $0.00 dividend income - $318.00 capital appreciation); or
2. Total Net Profit (If Wheaton Precious Metals shares assigned at $92.00 strike price at its August 22nd, 2025 expiration): +$225.00
= (+$510.00 + $33.00 dividend income - $318.00)
1. Absolute Return [If WPM options exercised on the final business day prior to the ex-dividend date]: +1.1%
= +$192.00/$18,209.34
Annualized Return-on-Investment (If option exercised early): +64.1%
= (+$192.00/$18,209.34) * (365/6 days); or
2. Absolute Return (If WPM shares assigned at $92.00 strike price at the August 22nd, 2025 options expiration): +1.2%
= +$225.00/$18,209.34
Annualized Return (If WPM stock assigned at $92.00 at the August 22nd, 2025 expiration): +64.4%
= (+$225.00/$18,209.34) * (365/7 days)
Either
outcome would provide an excellent return-on-investment result. These returns will be achieved as long as the stock is
above the $92.00 strike price at assignment. If the stock declines
below the strike price, the breakeven price of $90.875 ($93.59 stock purchase price - $2.55 Call options premium received - $.165 per share ex-dividend amount)
provides 2.9% downside protection below today's stock purchase
price.
