Covered Call Position Established in Microsoft Corporation

I was very surprised at the sharp stock price decline this morning in response to Microsoft's Q2 2026 earnings report issued after the market close yesterday.  They had a slight decline in year-over-year increase of +38% in Azure revenue in Q1 2026 (down from +40% in Q1), but the 12% stock price decline today seems to reflect a concern that their spending was above plan since their total company eps increased by 24% over the prior year quarter.  Given these increases along with beating analysts' revenue and eps estimates, today's decline seems excessive to me, so I decided to enter a Covered Call buy/write order at a net debit limit price of $414.90 at the $425.00 strike price and at the February 13th, 2026 options expiration date.  

When transacted today, one hundred Microsoft shares were purchased at $427.80 and 1 February 13th, 2026 $425.00 Call option was sold at $12.90 per share -- a net debit of $416.90 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 $10.10 per share [$12.90 Call option premium - ($427.80 stock purchase price - $425.00 strike price)].  The probability of assignment on the options expiration date was 52.0% when this transaction occurred.

As detailed below, a potential outcome for this Microsoft Corporation investment is +2.4% absolute return-on-investment for the next 15 days (equivalent to +59.2% annualized-return-on-investment) if the stock closes above the $425.00 strike price on the February 13th, 2026 options expiration date.

Microsoft Corporation (MSFT) -- New Covered Call Position

The net debit buy/write limit order was executed as follows:
1/29/2026 Bought 100 shares of Microsoft stock @ $427.80 per share.  
1/29/2026 Sold 1 MSFT February 13th, 2026 $425.00 Call option @ $12.90 per share.  The Implied Volatility of the Call was 33.2 when this transaction was executed.

A possible overall performance result (including commissions) if this position is assigned on its 2/13/2026 option expiration date is as follows:
Microsoft Covered Call Net Investment: $41,490.67
= ($427.80 - $12.90) * 100 shares + $.67 commission

Net Profit Components:
(a) Call Option Income: +$1,289.33
= ($12.90 * 100 shares) - $.67 commission
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If Microsoft stock is above the $425.00 strike price at the February 13th options expiration date): -$280.00
= ($425.00 - $427.80) * 100 shares

Potential Total Net Profit (If assigned at expiration): +$1,009.33
= (+$1,289.33 option income + $0.00 dividend income - $280.00 capital appreciation)

Potential Absolute Return-on-Investment: +2.4%
= +$1,009.33/$41,490.67
Potential Equivalent Annualized-Return-on-Investment: +59.2%
= (+$1,009.33/$41,490.67) * (365/15 days)