Covered Calls Established in Commercial Metals Co.

Today, a Covered Calls position was established in Commercial Metals Co.(ticker CMC) with cash received today from the early exercise of AT&T Inc. A short-term Covered Calls position was established in CMC for the January 18th, 2019 expiration and at the $15.00 strike price when the stock was at $15.83.   Given the Covered Calls Advisor's current Overall Market Meter sentiment of Slightly Bearish, a relatively conservative moderately in-the-money position was established.

There is an upcoming ex-dividend of $.12 on January 14th (a 3.2% dividend yield) which is included in the return-on-investment analysis below.  Hopefully, the stock will close on the January 18th expiration with the stock price above the $15.00 strike price so the maximum potential return-on-investment is achieved. The stock's decline since its quarterly earnings report two days ago seems unwarranted. Also, the implied volatility level currently available in these Call options is substantially higher than their historical average during periods without an upcoming earnings report, so the potential returns are exceptionally high in this instance. In fact, a potential outcome for this investment is +1.8% absolute return-on-investment for the next 10 days (equivalent to +66.4% on an annualized return basis) if Commercial Metals Co. stock closes above the $15.00 strike price on the Jan. 18th options expiration date.

Commercial Metals Co. (CMC) -- New Covered Calls Position
The transactions were:
01/09/2019 Bought 500 shares of Commercial Metals Co. stock @ $15.83 per share 
01/09/2019 Sold 5 CMC Jan 18th, 2019 $15.00 Call options @ $.99 per share
01/14/2019 Upcoming ex-dividend of $.12 per share

A possible overall performance result (including commissions) would be as follows:
Covered Calls Cost Basis: $7,428.30
= ($15.83 - $.99)* 500 shares + $8.30 commission

Net Profit Components:
(a) Options Income: +$495.00
= ($.99* 500 shares)
(b) Dividend Income: +$60.00
= $.12 per share * 500 shares 
(c) Capital Appreciation (If Commercial Metals Co. stock is above $15.00 strike price at Jan 18th expiration): -$419.95
= ($15.00 -$15.83)* 500 shares - $4.95 commission

Potential Total Net Profit (If CMC stock assigned at expiration): +$135.05
= (+$495.00 options income +$60.00 dividend income -$419.95 capital appreciation)

Absolute Return: +1.8%
= +$135.05/$7,428.30
Equivalent Annualized Return: +66.4%
= (+$135.05/$7,428.30)*(365/10 days)

The downside 'breakeven price' at expiration is at $14.72 ($15.83 - $.99 - $.12), which is 7.0% below the current market price of $15.83.  This is very good downside protection given the attractive potential +1.8% absolute return and +66.4% annualized ROI over the next 10 day period.