Established Covered Calls in Blackstone Group L.P.

Today, a new Covered Calls positions was entered in Blackstone Group L.P. (ticker BX) for the December 21st, 2018 options expiration and at the $34.00 strike price when the stock was at $33.61.  

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

+3.5% absolute return in 39 days (equivalent to a +32.8% annualized return-on-investment) if the price of BX is unchanged upon the Dec 21st options expiration; OR

+4.7% absolute return in 39 days (equivalent to a +43.6% annualized return-on-investment) if the price of BX increases above the $34.00 strike price on the expiration date 

Blackstone Group L.P. (BX) -- New Covered Calls Position

The transactions were as follows:
11/13/2018 Bought 300 shares of Blackstone Group @ $33.61 
11/13/2018 Sold 3 BX Dec 21st, 2018 $34.00 Call options @ $1.14 per share
Note: this was a simultaneous Buy/Write transaction.  There is good liquidity with 2,565 Open Interest contracts and the Implied Volatility of these Call options was 31.0 when this transaction was executed. 

Two possible overall performance result (including commissions) would be as follows:
Covered Calls Cost Basis: $9,747.96
= ($33.61 - $1.14)* 300 shares + $6.96 commission

Net Profit Components:
(a) Options Income: +$342.00
= ($1.14* 300 shares)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If BX is unchanged at $33.61 purchase price at Dec 21st expiration): +$0.00
= ($33.61 -$33.61)* 300 shares; OR
(c) Capital Appreciation (If BX is above $34.00 strike price at Dec 21st expiration): +$112.05
= ($34.00 -$33.61)* 300 shares - $4.95 commission

(a) Total Net Profit (If BX price unchanged at $33.61 at expiration): +$342.00
= (+$342.00 options income +$0.00 dividend income -$0.00 capital appreciation); OR
(b) Total Net Profit (If BX shares assigned at expiration): +$454.05
= (+$342.00 options income +$0.00 dividend income +$112.05 capital appreciation)

(a) Absolute Return (If BX price unchanged at expiration): +3.5%
= +$342.00/$9,747.96
Equivalent Annualized Return: +32.8%
= (+$342.00/$9,747.96)*(365/39 days); OR
(b) Absolute Return (If BX shares assigned at expiration): +4.7%
= +$454.05/$9,747.96
Equivalent Annualized Return: +43.6%
= (+$454.05/$9,747.96)*(365/39 days)

The downside 'breakeven price' at expiration is at $32.47 ($33.61 - $1.14), which is 3.4% below the current market price of $33.61.

The 'crossover price' at expiration is $34.75 ($33.61 + $1.14).  This is the price above which it would have been more profitable to buy-and-hold Blackstone Group stock until the December 21st, 2018 options expiration date.