Established Covered Call Position in Constellation Brands Inc.

Today a Covered Call position was established in Constellation Brands Inc. (ticker symbol STZ) with a November 7th, 2025 expiration and at the $135.00 strike price.  This position has an upcoming quarterly ex-dividend on October 30th of $1.02 per share, so two potential returns-on-investment for this position, as detailed below, includes the possibility of early exercise since the ex-dividend is prior to the November 7th options expiration date.  Constellation Brands reported their 3rd quarter earnings about three weeks ago, so there is no earnings report prior to the November 7th options expiration date.  A moderately in-the-money Covered Call position was established with the probability that the position will be assigned on its options expiration date was 70.7% when this position was established. 


As detailed below, two potential return-on-investment results are: 

•  +1.2% absolute return (equivalent to +44.7% annualized return-on-investment for the next 10 days) if the stock is assigned early (business day prior to the October 30th ex-dividend date); OR 

• +2.0% absolute return (equivalent to +40.3% annualized return-on-investment over the next 18 days) if the stock is assigned on the November 7th options expiration date.

Constellation Brands Inc. (STZ) -- New Covered Call Position
The simultaneous buy/write transaction was:
10/20/2025 Bought 100 Constellation Brands shares @ $140.78
10/20/2025 Sold 1 Constellation Brands 10/7/2025 $135.00 Call option @ $7.42
Note: the Implied Volatility of this Call options was 32.1 when this transaction was executed.
10/30/2025 Upcoming quarterly ex-dividend of $1.02 per share

Two possible overall performance results (including commissions) for this Constellation Brands Covered Call position are as follows:
Covered Call Cost Basis: $13,336.67
= ($140.78 - $7.42) * 100 shares + $.67 commission

Net Profit Components:
(a) Option Income: +$741.33
= ($7.42 * 100 shares) - $.67
(b) Dividend Income (If option exercised early on the last business day prior to the October 30th, 2025 ex-div date): +$0.00; or
(b) Dividend Income (If Constellation Brands stock assigned at the November 7th, 2025 expiration): +$102.00
= ($1.02 dividend per share x 100 shares)

(c) Capital Appreciation (If Constellation Brands assigned early on October 29th): -$578.00
+($135.00 strike price - $140.78 stock purchase price) * 100 shares; or
(c) Capital Appreciation (If shares assigned at $135.00 strike price at options expiration): -$578.00
+($135.00 - $140.78) * 100 shares

1. Total Net Profit [If option exercised on October 29th (the last business day prior to the October 30th ex-dividend date)]: +$163.33

= (+$741.33 options income +$0.00 dividend income -$578.00 capital appreciation); or

2. Total Net Profit (If Constellation Brands shares assigned at $135.00 on the November 7th, 2025 expiration): +$265.33

= (+$741.33 + $102.00 dividend income - $578.00)

1. Absolute Return [If option exercised early on the day prior to the 10/30/2025 ex-dividend date)]: +1.2%

= +$163.33/$13,336.67

Annualized Return (If option exercised early): +44.7%

= (+$163.33/$13,336.67) * (365/10 days); or

2. Absolute Return (If STZ shares assigned at $135.00 at their November 7th, 2025 options expiration): +2.0%

= +$265.33/$13,336.67

Annualized Return (If STZ shares assigned at $135.00 at the Nov. 7th, 2025 options expiration date): +40.3%

= (+$265.33/$13,336.67) * (365/18 days)

Either outcome provides an attractive return-on-investment result for this Constellation Brands investment.  These returns will be achieved as long as the stock is above the $135.00 strike price at assignment.  If the stock declines below the strike price, the breakeven price of $132.34 ($140.78 - $7.42 - $1.02) provides a 6.0% downside protection below today's stock purchase price.

At least eight of the nine metrics used in the Covered Calls Advisor's Dividend Capture Strategy spreadsheet must be 'YES' prior to establishing a position.  As shown below, eight of the nine criteria are met for this Constellation Brands Covered Call position.