Established New Covered Calls Position in Alphabet Inc.

Today, a new Covered Calls position was established in Alphabet Inc. (although it's still more often still referred to as Google) with a November 16th, 2018 options expiration date. Despite the recent decline in the stock market, including Alphabet stock, the Covered Calls Advisor is now bullish on both Alphabet and Alibaba's long-term prospects and intends to continue establishing monthly Covered Calls positions in both companies. 

As detailed below, two potential return-on-investment results are: (1) +3.3% absolute return in 29 days (equivalent to a +41.9% annualized return-on-investment) if the stock closes at $1,104.78 (same as today's purchase price); and (2) +4.7% absolute return in 29 days (equivalent to a +59.7% annualized return-on-investment) if the stock closes above the $1,120.00 strike price on the Nov. 16th options expiration date.  These high potential returns are largely attributable to the elevated implied volatility of the Call option (32.9) since there is a quarterly earnings release upcoming prior to the options expiration date.

Today's transactions and two potential results are detailed below:

1. Alphabet Inc. (GOOGL) -- New Covered Calls Position

The transactions were as follows:
10/19/2018 Bought 100 shares of Alphabet Inc. stock @ $1,104.78 per share 
10/19/2018 Sold 1 Alphabet Nov 16th, 2018 $1,120.00 Call option @ $35.58 per share
Note: this was a simultaneous Buy/Write transaction

There are a multitude of possible outcomes, but two possible overall performance results (including commissions) are as follows:
Covered Calls Cost Basis: $106,925.62
= ($1,104.78 - $35.58)* 100 shares + $5.62 commission

Net Profit Components:
(a) Options Income: +$3,558.00
= ($35.58* 100 shares)
(b) Dividend Income: +$0.00 
(c) Capital Appreciation (If GOOGL stock price remains unchanged at $1,104.78 strike price at Nov 16th expiration): +$0.00
= ($1,104.78 -$1,104.78)* 100 shares; OR
(c) Capital Appreciation (If GOOGL stock is above $1,104.78 strike price at Nov 16th expiration): +$1,517.05
= ($1,120.00 -$1,104.78)* 100 shares - $4.95 commission

(a) Total Net Profit (If stock price unchanged at $1,104.78 at Nov. 16th options expiration): +$3,558.00
= (+$3,558.00 options income +$0.00 dividend income +$0.00 capital appreciation); OR
(b) Total Net Profit (If stock price is above $1,120.00 strike price at Nov. 16th options expiration): +$5,075.05
= (+$3,558.00 options income +$0.00 dividend income +$1,517.05 capital appreciation)

(a) Absolute Return (If stock price unchanged at $1,104.78 at Nov. 16th options expiration): +3.3%
= +$3,558.00/$106,925.62
Equivalent Annualized Return: +41.9%
= (+$3,558.00/$106,925.62)*(365/29 days); OR
(b) Absolute Return (If stock price is above $1,120.00 strike price at Nov. 16th options expiration): +4.7%
= +$5,075.05/$106,925.62
Equivalent Annualized Return: +59.7%
= (+$5,075.05/$106,925.62)*(365/29 days)

The downside 'breakeven price' at expiration is at $1,069.20 ($1,104.78 - $35.58), which is 3.2% below the current market price of $1,104.78.