Late in this morning's trading session, a Covered Call position was established in Capital One Financial Corporation (ticker symbol COF) when the Covered Calls Advisor's buy/write limit order was executed -- 100 shares were purchased at $219.31 and one February 27th, 2026 Call option was sold at $13.25 per share at the $210.00 strike price. Therefore, a net debit price of $206.06 which is a time value of $3.94 per share [$13.25 Call options price - ($219.31 stock price - $210.00 strike price)]. This is a moderately in-the-money position since its probability of closing in-the-money on the 2/27/2026 options expiration date was 67.8% when this position was established. The current average target price of the 22 analysts covering Capital One Financial is $278.53 (+27.0% above today's stock purchase price).
Two potential return-on-investment results for this position are highlighted below and includes the possibility of early assignment since a quarterly ex-dividend of $.80 per share (1.5% annualized dividend yield) goes ex-dividend on February 19th (which is prior to the February 27th options expiration date). The stock would have to move up in price by February 18th which is the last trading day prior to the February 19th ex-div date and by an amount that would cause the time value remaining in the option to decline from its $3.94 value today to about $.20 or less. If this occurs, the owner of the Call option might exercise their right to purchase the stock at the $210.00 strike price, in which case the option would immediately expire worthless but the owner of the Call would then own the stock and would capture the dividend. This early assignment would be a desirable outcome since its +49.8% annualized return-on-investment (aroi) is greater than the +38.1% aroi that would be achieved if the position were to be instead assigned on its February 27th options expiration date. But either result would be attractive since they both exceed my preferred minimum annualized return-on-investment criteria (see criteria #8 and #9 at the bottom of this post) when using my Dividend Capture Strategy. Also, as I prefer, there is no intervening quarterly earnings report since Capital One's next quarterly earnings report on April 21st, 2026 is after this position's Feb. 27th, 2026 options expiration date.
As detailed below, two potential return-on-investment results are:
- +1.9% absolute return (equivalent to +49.8% annualized
return-on-investment for the next 14 days) if the stock is assigned early (business day
prior to the February 19th, 2026 ex-dividend date); OR
- +2.3%
absolute return (equivalent to +38.1% annualized return-on-investment over the next 22 days) if the stock is assigned on the February 27th, 2026 options expiration date.
Capital One Financial Corporation (COF) -- New Covered Call Position
The buy/write transaction was:
2/5/2026 Bought 100 Capital One Financial shares @ $219.31
2/5/2026 Sold 1 Capital One 2/27/2026 $210.00 Call option @ $13.25 per share. The Implied Volatility of the Calls was 36.5 when this transaction occurred which, as I prefer, is well above the current S&P 500 Volatility Index (i.e. VIX) of 20.6.
2/19/2026 Upcoming quarterly ex-dividend of $.80 per share
Two possible overall performance results (including commissions) for this Capital One Covered Call position are as follows:
Covered Call Net Investment: $20,606.67
= ($219.31 - $13.25) * 100 shares + $.67 commission
Net Profit Components:
(a) Options Income: +$1,324.33
= ($13.25 * 100 shares) - $.67 commission
(b) Dividend Income (If option exercised early on February 18th, the last business day prior to the February 19th ex-div date): +$0.00; or
(b) Dividend Income (If COF stock assigned at the February 27th, 2026 options expiration date): +$80.00
= ($.80 dividend per share x 100 shares)
(c) Capital Appreciation (If Capital One Call option assigned early): -$931.00
+($210.00 strike price - $219.31 stock purchase price) * 100 shares; or
(c) Capital Appreciation (If shares assigned at $210.00 strike price at options expiration): -$931.00 = +($210.00 - $219.31) * 100 shares
1. Total Net Profit [If option exercised early]: +$393.33
= (+$1,324.33 option income +$0.00 dividend income - $931.00 capital appreciation); or
2. Total Net Profit (If COF shares assigned at $210.00 at the Feb. 27th options expiration date): +$473.33
= (+$1,324.33 option income +$80.00 dividend income - $931.00 capital appreciation)
1. Absolute Return-on-Investment [If option exercised early on Feb. 18th (business day prior to the 2/19/2026 ex-dividend date)]: +1.9%
= +$393.33/$20,606.67
Annualized Return-on-Investment (If option exercised early): +49.8%
= (+$393.33/$20,606.67) * (365/14 days); or
2. Absolute Return-on-Investment (If Capital One shares assigned at $210.00 at the February 27th, 2026 options expiration date): +2.3%
= +$473.33/$20,606.67
Annualized Return-on-Investment (If COF shares assigned at $210.00 at the 2/27/2026 options expiration): +38.1%
= (+$473.33/$20,606.67) * (365/22 days)
At least eight of the nine metrics used in the Covered Calls Advisor's Dividend Capture Strategy spreadsheet (see below) must be 'YES' prior to establishing a new Covered Calls position using the Covered Calls Advisor's Dividend Capture strategy. Eight of the nine criteria are achieved for this Capital One Financial Covered Call position.
