Covered Call Position Established in AppLovin Corporation

This afternoon a new two-week Covered Call net debit buy/write limit order was established in AppLovin Corporation (ticker APP) for the October 23rd, 2026 expiration and at the $262.50 strike price.  Today's limit order was placed at a $257.40, so the extrinsic value (which represents the maximum profit potential for this position) was $5.10 per share [$19.58 Call option premium - ($276.98 stock purchase price - $262.50 strike price)].  The Implied Volatility of the Call option was 51.8% and the probability that this position will be in-the-money and therefore assigned on its options expiration date was 68.7% when this order was transacted.

AppLovin is a $94 billion market cap leading global provider of a full-stack AI/Machine Learning powered software platform for advertisers to monetize their mobile advertising applications content.  They have a self-serve ads-management dashboard that has enhanced the rate at which they add new customers which will continue to support their revenue growth and also their substantial GAAP profit margins.  Their visionary CEO is Adam Foroughi who was one of the co-founders of the company in 2012.  Their IPO was in 2021.  They employ highly educated machine learning research scientists with graduate degrees from top-rated universities.  

As detailed below, the potential return-on-investment result is +2.0% absolute return-on-investment in 14 days (equivalent to a +51.6% annualized return-on-investment).  

AppLovin Corporation (APP) -- New Covered Call Position

The simultaneous buy/write transaction was as follows:
10/9/2026 Bought 100 shares of AppLovin stock @ $276.98 per share.  
10/9/2026 Sold 1 AppLovin October 23rd $262.50 Call option @ $19.58 per share.

A possible overall performance result (including commissions) would be as follows:
Covered Call Cost Basis: $25,740.67
= ($276.98 - $19.58) * 100 shares + $.67 commission

Net Profit Components:
(a) Option Income: +$1,957.33
= ($19.58 * 100 shares) - $.67
(b) Dividend Income: +$0.00 
(c) Capital Appreciation (If AppLovin stock is above the $262.50 strike price at the 10/23/2026 options expiration date): -$1,448.00
= ($262.50 strike price - $276.98 stock purchase price) * 100 shares

Total Net Profit Potential: +$509.33
= (+$1,957.33 option income + $0.00 dividend income - $1,448.00 capital appreciation)

Potential Absolute Return-on-Investment: +2.0%
= +$509.33/$25,740.67
Potential Equivalent Annualized Return-on-Investment: +51.6%
= (+$509.33/$25,740.67) * (365/14 days)

Covered Call Position Established in NVIDIA Corporation

A short-term (9 days) in-the-money Covered Call position was established this afternoon in NVIDIA Corporation (ticker NVDA).  My net buy/write limit order at $227.98 was executed when one hundred shares were purchased at $236.93 and one October 16th, 2026 Call option was simultaneously sold at the $230.00 strike price at $8.95 per share, which provides a $2.02 per share = [$8.95 Call option premium received - ($236.93 stock purchase price - $230.00 option strike price)] time value profit potential.  An in-the-money Covered Call position was established for this new position with the probability that NVIDIA's stock will close in-the-money on the 10/16/2026 options expiration date was 72.6% when this transaction was executed. 

As detailed below, a potential return-on-investment result is +0.9% absolute return-on-investment (equivalent to +35.8% annualized return-on-investment for the next 9 days) if NVIDIA's share price is in-the-money (i.e. above the $230.00 strike price) and therefore assigned on its October 16th, 2026 options expiration date.  

NVIDIA Corporation (NVDA) -- New Covered Call Position

Today's buy/write net limit order transaction was as follows:
10/7/2026 Bought 100 NVIDIA Corporation shares at $236.93.

10/7/2026 Sold 1 NVIDIA 10/16/2026 $230.00 Call option @ $8.95 per share.  The Implied Volatility of this Call option was 30.9 when this position was established.  

A possible overall performance result (including commissions) for this NVIDIA Corporation Covered Call position is as follows:
Covered Call Net Investment: $22,798.67
= ($236.93 - $8.95) * 100 shares + $.67 commission

Net Profit:
(a) Option Income: +$894.33
= ($8.95 * 100 shares) - $.67 commission
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If 100 NVIDIA shares assigned at the $230.00 strike price at expiration): -$693.00
+($230.00 strike price - $236.93 stock purchase price) * 100 shares

Total Net Profit Potential (If 100 NVIDIA shares in-the-money and therefore assigned at the $230.00 strike price at the options expiration date): +$201.33
= (+$894.33 option income + $0.00 dividend income - $693.00 capital appreciation)

Potential Absolute Return-on-Investment: +0.9%
= +$201.33/$22,798.67
Potential Annualized Return-on-Investment: +35.8%
= (+$201.33/$22,798.67) * (365/9 days)

Early Assignment of Covered Calls Position in Gap Inc.

This morning my broker (Schwab) emailed me that six Gap Inc. (ticker GAP) October 9th, 2026 Call options were exercised early.  Gap's stock price increased from $21.23 when this position was established to $23.79 at yesterday's market close.  The original $.30 time value in the Call options when the position was established had declined to $0.06 at yesterday's market close. So, with 2 days remaining until the 10/9/2026 options expiration date, the owner of these Calls exercised their option to buy the 600 shares at the $20.50 strike price in order to receive today's $.175 per share ex-dividend.  

The post when this Gap Inc. Covered Calls position was originally established is here.  

As detailed below, the return-on-investment result for this Gap Inc. Covered Calls position was +1.5% absolute return in 13 days (equivalent to a +40.8% annualized return-on-investment).

Gap Inc. (GAP) -- Covered Calls Position Closed by Early Assignment
The buy/write transaction was:

9/24/2025 Bought 600 Gap Inc. shares @ $21.23
9/24/2025 Sold 6 Gap 10/9/2026 $20.50 Call options @ $1.03
Note: the Implied Volatility of the Call options was 35.4 when this buy/write transaction was executed.
10/7/2026 Early Assignment of these six Gap Call options, so the Calls expired and 600 Gap shares were sold at the $20.50 strike price.

The overall performance results (including commissions) for this Gap Covered Calls position are as follows:
Covered Calls Net Investment: $12,124.02

= ($21.23 - $1.03) * 600 shares + $4.02 commission

Net Profit Components:
(a) Options Income: +$613.98
= ($1.03 * 600 shares) - $4.02 commission

(b) Dividend Income (Six Call options exercised early on October 6th, the last business day prior to the Oct. 7th, 2026 ex-div date): +$0.00
(c) Capital Appreciation (Gap Call options assigned early): -$438.00
+($20.50 strike price - $21.23 stock purchase price) * 600 shares

Total Net Profit [Six Call options exercised early]: +$175.98

= (+$613.98 options income + $0.00 dividend income - $438.00 capital appreciation)

Absolute Return-on-Investment: +1.5%

= +$175.98/$12,124.02

Annualized Return-on-Investment: +40.8%

= (+$175.98/$12,124.02) * (365/13 days)

October 2nd, 2026 Options Expiration Results

The Covered Calls Advisor Portfolio had three Covered Calls positions with October 2nd, 2026 options expirations and all three positions (Alphabet Inc., Hewlett Packard Enterprise Company, and NVIDIA Corporation) closed with their stock prices in-the-money.  So, their Calls expired with no remaining time value and the Covered Calls were closed out by the stocks being sold at their respective strike prices on their October 2nd options expiration date. The return-on-investment details (in alphabetical order) for each position is as follows:

1. Alphabet Inc. (GOOGL) -- +0.9% absolute return-on-investment (equivalent to +38.1% annualized return-on-investment) for the 9 days of this investment.  This Alphabet Covered Call position had a $330.00 strike price and it closed at $343.50 yesterday.  The original blog post showing the details of this position is here. 

2. Hewlett Packard Enterprise Company (HPE) -- +2.0% absolute return-on-investment (equivalent to +74.1% annualized return-on-investment) for the 10 days of this investment.  This Hewlett Packard Enterprise Covered Calls position had a $58.00 strike price and it closed at $69.33 yesterday.  The original blog post showing the details of this position is here. 

3. Nvidia Corporation (NVDA) -- +3.3% absolute return-on-investment (equivalent to +81.1% annualized return-on-investment) for the 15 days of this investment.  This NVIDIA Covered Call position had a $220.00 strike price and it closed at $233.95 yesterday.  The original blog post showing the details of this position is here.

I look forward to receiving your emails with your questions/comments at the email address shown below on any topics related to the Covered Calls investing strategy. 

Jeff Partlow
The Covered Calls Advisor
partlow@cox.net