Established Covered Calls Position in Alibaba Group Holding Ltd.

A new Covered Calls positions was established in Alibaba Group Holding Ltd. with a June 21st, 2019 options expiration date and at the $155.00 strike price when Alibaba was priced at $161.53. 

The Covered Calls Advisor considers Alibaba to be a core portfolio holding, so the current intention is to continue the pattern of prior months by establishing ongoing monthly Covered Calls positions in Alibaba. 

As detailed below, a potential return-on-investment result is +2.6% absolute return in 33 days (equivalent to a +28.5% annualized return-on-investment).
The transactions and a potential result are detailed below:

1. Alibaba Group Holding Ltd. (BABA) -- New Covered Calls Position

The transactions were as follows:
05/20/2019 Bought 200 shares of Alibaba stock @ $161.53 per share 
05/20/2019 Sold 2 Alibaba June 21st, 2019 $155.00 Call options @ $10.45 per share
Note: this was a simultaneous Buy/Write transaction

A possible overall performance result (including commissions) would be as follows:
Covered Calls Cost Basis: $30,222.29
= ($161.53 - $10.45) * 200 shares + $6.29 commission

Net Profit Components:
(a) Options Income: +$2,090.00
= ($10.45* 200 shares)
(b) Dividend Income: +$0.00 
(c) Capital Appreciation (If BABA stock is above $155.00 strike price at June 21st expiration): -$1,310.95
= ($155.00 -$161.53) * 200 shares - $4.95 commission

Total Net Profit: +$779.05
= (+$2,090.00 options income +$0.00 dividend income -$1,310.95 capital appreciation)

Absolute Return: +2.6%
= +$779.05/$30,222.29
Equivalent Annualized Return: +28.5%
= (+$779.05/$30,222.29)*(365/33 days)

The downside 'breakeven price' at expiration is at $151.08 ($161.53 - $10.45), which is 6.5% below the current market price of $161.53.

Using the Black-Scholes Options Pricing Model, the probability of making a profit (if held until the June 21, 2019 options expiration) for this Alibaba Covered Calls position is 67.9%, so the expected value annualized ROI of this investment (if held until expiration) is +19.4% (+28.5% * 67.9%), a nice result for this moderately in-the-money Covered Calls position, especially since there is no earnings report prior to the options expiration date.

The 'crossover price' at expiration is $165.45 = $161.53 + [$10.45 - ($161.53 - $155.00)].
This is the price at expiration above which it would have been more profitable to simply buy-and-hold Alibaba stock until the June 21st, 2019 options expiration date rather than establishing this Covered Calls position.