Established Covered Call Position in D.R. Horton Inc.

This afternoon my Covered Call net debit limit order was entered and soon thereafter executed in D.R. Horton Inc. (ticker DHI) with a short-term August 14th, 2026 options expiration date.  One D.R. Horton Call option was sold at $7.99 at the $140.00 strike price when the stock price was $145.89 -- the net debit was $137.90 per share and the Call option's time value profit potential was $2.10 [$7.99 option price - ($145.89 stock price - $140.00 strike price)].  The probability that the Call will be in-the-money (i.e. above the $140.00 strike price) on the 814/2026 options expiration date was 69.4% when this position was established. There is an intervening ex-dividend of $.45 per share (1.2% annual dividend yield) on August 6th which is included in the potential return-on-investment results detailed below.

D.R. Horton is the largest homebuilder in America by market cap. Importantly, it is considered the best-in-class operator in its industry and has the highest exposure to the critically important entry-level buyers (67% of closings), lowest debt leverage, and least on-balance sheet land risk.  Although homebuilders' business has been stagnant during the past 3 years, home buyers' demand is strong but constricted by the current high mortgage interest rates.  Just yesterday the 30-year treasury bond yield hit an intraday high above 5.20% which was last seen two decades ago.  Whenever these rates begin to reverse (especially if below 4.5%), homebuilders' financials will begin to improve.  In the meantime, D.R. Horton will continue to manage their business wisely and profitably.  

As detailed below, two potential return-on-investment results are: (1) +1.3% absolute return-on-investment (equivalent to a +67.3% annualized return-on-investment in 7 days if the Call option is exercised and the stock is therefore assigned on the last business day prior to the August 6th ex-dividend date; and (2) +1.6% absolute return-on-investment (equivalent to a +39.4% annualized return-on-investment in 15 days if the DHI stock is in-the-money and the stock is assigned on its August 14th, 2026 options expiration date.

D.R. Horton Inc. (DHI) -- New Covered Call Position
The Buy/Write transaction was as follows:
7/30/2026 Bought 100 shares of D.R. Horton Inc. stock @ $145.89 per share.  
7/30/2026 Sold 1 D.R. Horton August 14th, 2026 $140.00 Call option @ $7.99 per share.  The Implied Volatility of the Call option was 35.8 which, as preferred, is well above the current 17.1 of VIX.
8/6/2026 Upcoming ex-dividend of $.45 per share

Two possible overall performance results (including commissions) would be as follows:
Covered Call Position Net Investment: $13,787.67
= ($145.89 - $7.99) * 100 shares + $.67 commission

Net Profit Components:
(a) Option Income: +$767.00
= ($7.67 * 100 shares)
(b) Dividend Income (If option exercised early on Aug. 5th, the last business day prior to the August 6th ex-div date): +$0.00; or
(b) Dividend Income (If DHI stock assigned at the Aug 14th, 2026 expiration): $45.00
= ($.45 dividend per share x 100 shares)
(c) Capital Appreciation (If D.R. Horton Call option is assigned early on August 6th): -$589.00
+($140.00 strike price - $145.89 stock price) * 100 shares; or
(c) Capital Appreciation (If shares assigned at $140.00 strike price at the Aug. 14th options expiration): -$589.00
+($140.00 - $145.89) * 100 shares

1. Total Net Profit [If option exercised early on the last business day prior to the August 6th ex-dividend date)]: +$178.00

= (+$767.00 option income +$0.00 dividend income -$589.00 capital appreciation); or

2. Total Net Profit (If stock shares assigned at $140.00 strike price at the Aug. 14th, 2026 expiration): +$223.00

= (+$767.00 option income + $45.00 dividend income - $589.00 capital appreciation)

1. Absolute Return-on-Investment (If option exercised early on August 5th): +1.3%

= +$178.00/$13,787.67

Annualized Return-on-Investment: +67.3%

= (+$178.00/$13,787.67) * (365/7 days); or

2. Absolute Return-on-Investment (If D.R. Horton shares assigned at $140.00 at the August 14th, 2026 options expiration date): +1.6%

= +$223.00/$13,787.67

Annualized Return-on-Investment (If shares assigned at the 8/14/2026 options expiration date): +39.4%

= (+$223.00/$13,787.67) * (365/15 days)

Established Covered Call in NVIDIA Corporation

A Covered Call position of 16 days duration was established today in NVIDIA Corporation (ticker NVDA).  My buy/write net debit limit order at $183.30 was executed and the time value (aka extrinsic value) was $6.70 per share [$7.72 Call option premium - ($191.02 stock purchase price - $190.00 strike price)].  A slightly in-the-money strike price was established with the probability that NVIDIA's stock will close in-the-money (i.e. above the $190.00 strike price) on the 8/14/2026 options expiration date was 51.3% when this transaction was executed.  NVIDIA's next earnings report is on 8/26 which, as preferred, is after the 8/14 expiration date.  But the Implied Volatility of the Call option sold was high at 44.0 given the uncertainty of the four megacap companies reporting earnings this week (Meta, Microsoft, Amazon, and Apple) and their commentary about their capital expenditures -- which will also influence NVIDIA's stock price reaction.  I'm optimistic the four will continue their large capex spending plans given Alphabet's increase in capex plans communicated during their recent earnings report.   

As detailed below, a potential return-on-investment result if NVIDIA's share price is in-the-money (i.e. above the $190.00 strike price) and therefore assigned on its August 14th, 2026 options expiration date is +3.7% absolute return-on-investment (equivalent to +83.3% annualized return-on-investment for the next 16 days).  This very high potential roi result stems from both the close to at-the-money strike price selected as well as the high Implied Volatility of the Call option sold.

NVIDIA Corporation (NVDA) -- New Covered Call Position

The buy/write net limit order transaction was as follows:
7/29/2026 Bought 100 NVIDIA Corporation shares at $191.02.  Note: NVIDIA's stock price was very oversold this morning when this transaction was executed -- the RSI(2) was only 5.5.

7/29/2026 Sold 1 NVIDIA 8/14/2026 $190.00 Call option @ $7.72 per share.  The Implied Volatility of this Call was 44.0 when this position was established, which is well above (as preferred) the current value of the S&P 500 Volatility Index (i.e. VIX) of 19.8.

A possible overall performance result (including commissions) for this NVIDIA Corporation Covered Call position is as follows:
Covered Call Net Investment: $18,330.67
= ($191.02 - $7.72) * 100 shares + $.67 commission

Net Profit:
(a) Option Income: +$771.33
= ($7.72 * 100 shares) - $.67 commission
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If 100 NVIDIA shares assigned (i.e. above the $190.00 strike price) on the 8/14/2026 options expiration date): -$102.00
+($190.00 strike price - $191.02 stock purchase price) * 100 shares

Total Net Profit Potential (If 100 NVIDIA shares are in-the money and therefore assigned at the $190.00 strike price on the 8/14/2026 options expiration date): +$669.33

= (+$771.33 option income + $0.00 dividend income - $102.00 capital appreciation)

Potential Absolute Return-on-Investment (If 100 NVIDIA shares assigned (i.e. sold) at the $190.00 strike price on the 8/14/2026 options expiration date): +3.7%

= (+$669.33/$18,330.67)

Potential Annualized Return-on-Investment (If 100 NVIDIA shares assigned at the $190.00 strike price on the 8/14/2026 options expiration date): +83.3%
= (+$669.33/$18,330.67) * (365/16 days)

Established Covered Calls Position in IBM Corporation

Today a Covered Calls position was established in IBM Corp. (ticker symbol IBM) when the Covered Calls Advisor's buy/write limit order was executed -- 200 shares were purchased at $217.67 and two August 21st, 2026 Call options were sold at $16.65 per share at the $205.00 strike price.  Therefore, a net debit price of $201.02 which is a time value of $3.98 per share [$16.65 Call options price - ($217.67 stock price - $205.00 strike price)].  This is a moderately in-the-money position since its probability of closing in-the-money on the 8/21/2026 options expiration date was 69.6% when this position was established.  

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 $1.69 per share (3.2% annualized dividend yield) goes ex-dividend on August 10th which is prior to the August 21st options expiration date.  Either result would be attractive since they both substantially exceed my preferred minimum annualized return-on-investment criteria when using my Dividend Capture Strategy.  Also, as I prefer, there is no intervening quarterly earnings report since IBM's next quarterly earnings report on October 28th, 2026 is after the options expiration date for this position. Finally, IBM passed every criterion in my "Overall Rating Versus Peers" stock screener.  

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

•  +2.0% absolute return (equivalent to +51.5% annualized return for the next 14 days) if the stock is assigned early (business day prior to the August 10th ex-dividend date); OR 

• +2.8% absolute return (equivalent to +41.1% annualized return over the next 25 days) if the stock is assigned on the August 21st, 2026 options expiration date.

IBM Corporation (IBM) -- New Covered Calls Position
The buy/write transaction was:
7/27/2026 Bought 200 IBM shares @ $217.67
7/27/2026 Sold 2 IBM 8/21/2026 $205.00 Call options @ $16.65  The Implied Volatility of the Calls was 40.4 when this transaction occurred, well above the current VIX of 19.2.
8/10/2026 Upcoming quarterly ex-dividend of $1.69 per share

Two possible overall performance results (including commissions) for this IBM Covered Calls position are as follows:
Covered Calls Net Investment: $40,205.34
= ($217.67 - $16.65) * 200 shares + $1.34 commission

Net Profit Components:
(a) Options Income: +$3,328.66
= ($16.65 * 200 shares) - $1.34 commission
(b) Dividend Income (If option exercised early on August 7th, the last business day prior to the August 10th ex-div date): +$0.00; or
(b) Dividend Income (If IBM stock assigned at the August 21st, 2026 options expiration date): +$338.00
= ($1.69 dividend per share x 200 shares)
(c) Capital Appreciation (If IBM Call options assigned early): -$2,534.00
+($205.00 strike price - $217.67 stock purchase price) * 200 shares; or
(c) Capital Appreciation (If shares assigned at $205.00 strike price at options expiration): -$2,534.00 = +($205.00 - $217.67) * 200 shares

1. Total Net Profit [If options exercised early]: +$794.66

= (+$3,328.66 options income +$0.00 dividend income -$2,534.00 capital appreciation); or

2. Total Net Profit (If IBM shares assigned at $205.00 at the August 21st expiration): +$1,132.66

= (+$3,328.66 options income +$338.00 dividend income -$2,534.00 capital appreciation)

1. Absolute Return-on-Investment [If option exercised early on August 7th (last business day prior to the 8/10/2026 ex-dividend date)]: +2.0%

= +$794.66/$40,205.34

Annualized Return-on-Investment (If option exercised early): +51.5%

= (+$794.66/$40,205.34) * (365/14 days); or

2. Absolute Return-on-Investment (If IBM shares assigned at $205.00 at the Augus 21st, 2026 options expiration): +2.8%

= +$1,132.66/$40,205.34

Annualized Return-on-Investment (If IBM shares assigned at $205.00 at the August 21st options expiration date): +41.1%

= (+$1,132.66/$40,205.34) * (365/25 days)

July 24th, 2026 Options Expiration Results

The Covered Calls Advisor Portfolio had two Covered Calls positions with July 24th, 2026 options expirations and both positions (IBM Corporation and NVIDIA Corporation) were assigned yesterday so they were closed out at their respective strike prices.  The return-on-investment summary for each position is as follows:

1. IBM Corporation (IBM) -- +1.6% absolute return-on-investment (equivalent to +71.7% annualized return-on-investment) for the 8 days of this investment.  This IBM Covered Call position had a $200.00 strike price and it closed at $214.19 yesterday.  The original blog post showing the details of this position is here. 

2. NVIDIA Corporation (NVDA) -- +2.3% absolute return-on-investment (equivalent to +84.3% annualized return-on-investment) for the 10 days of this investment.  This NVIDIA Covered Calls position had a $202.50 strike price and it closed at $206.84 yesterday.  The original blog post showing the details of this position is here.

There are two primary reasons why these annualized returns are so high: (1) these were short-term (i.e. 8 days and 10 days duration), and the rate of time value decay in the price of options increases (so the potential annualized roi normally also increases) as the duration of the initial position decreases; and (2) both positions also benefited from temporary upward spikes in the Implied Volatility of the Calls when the positions were established.  The IBM position was established on the day after it reported disappointing earnings and the stock was plummeting by an intraday record of more than 25%.  The NVIDIA position was established when its prior day closing price was $212.50 and the stock was purchased the following day when the price had declined to $207.61.

Send your questions/comments to the email address shown below on any topics related to the Covered Calls investing strategy. 

Jeff Partlow
The Covered Calls Advisor
partlow@cox.net