Established Covered Calls Position in Alexion Pharmaceuticals Inc.

A new monthly Covered Calls position was established in Alexion Pharma Inc. (ticker symbol ALXN) with an October 18th, 2019 options expiration date and at the $95.00 strike price when Alexion shares were priced at $97.44.  There are no earnings reports or ex-dividends prior to the options expiration date. 

As shown below, the potential return-on-investment result is +2.3% absolute return in 18 days (equivalent to a +46.4% annualized return-on-investment).


Alexion Pharma Inc. (ALXN) -- New Covered Calls Position

The transactions were as follows:
10/01/2019 Bought 200 shares of Alexion stock @ $97.44 per share 
10/01/2019 Sold 2 Alexion October 18th, 2019 $95.00 Call options @ $4.59 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: $18,576.29
= ($97.44 - $4.59) * 200 shares + $6.29 commission

Net Profit Components:
(a) Options Income: +$918.00
= ($4.59 * 200 shares)
(b) Dividend Income: +$0.00 
(c) Capital Appreciation (If Alexion stock is above $95.00 strike price at October 18th expiration): -$492.95
= ($95.00 -$97.44) * 200 shares - $4.95 commission

Total Net Profit: +$425.05
= (+$918.00 options income +$0.00 dividend income -$492.95 capital appreciation)

Absolute Return: +2.3%
= +$425.05/$18,576.29
Equivalent Annualized Return: +46.4%
= (+$425.05/$18,576.29)*(365/18 days)

The downside 'breakeven price' at expiration is at $92.85 ($97.44 - $4.59), which is 4.7% below the current market price of $97.44.