Covered Calls Established in Bank of America Corp.

Today, a Covered Calls position was established in Bank of America Corp. (ticker BAC) for the March 20th, 2020 expiration and at the $31.00 strike price when the stock was at $32.54.   Given the Covered Calls Advisor's current Overall Market Meter sentiment of Slightly Bearish, a relatively conservative slightly in-the-money position was established.

There is an upcoming ex-dividend of $.18 on March 5th which is included in the analysis below.  There is no upcoming earnings report prior to the expiration date.

As detailed below, a potential outcome for this investment is +2.0% absolute return-on-investment for the next 26 days (equivalent to +28.5% on an annualized return basis) if Bank of America stock closes above the $31.00 strike price on the March 20th options expiration date.

Bank of America Corp. (BAC) -- New Covered Calls Position
The transactions were:
02/24/2020 Bought 500 shares of Bank of America stock @ $32.54 per share 
02/24/2020 Sold 5 BAC March 20th, 2020 $31.00 Call options @ $1.98 per share
Note: The Open Interest in these Calls was a very liquid 5,603 contracts and the Implied Volatility was 34.3 (very attractive) considering the relative predictability of BofA's financials.
03/05/2020 Upcoming ex-dividend of $.18 per share

A possible overall performance result (including commissions) would be as follows:
Covered Calls Cost Basis: $15,283.35
= ($32.54 - $1.98)* 500 shares + $3.35 commission

Net Profit Components:
(a) Options Income: +$990.00
= ($1.98 * 500 shares)
(b) Dividend Income: +$90.00
= $.18 per share * 500 shares 
(c) Capital Appreciation (If Bank of America stock is above $31.00 strike price at Mar 20th expiration): -$770.00
= ($31.00 -$32.54) * 500 shares

Potential Total Net Profit (If BAC stock assigned at expiration): +$310.00
= (+$990.00 options income +$90.00 dividend income -$770.00 capital appreciation)

Absolute Return: +2.0%
= +$310.00/$15,283.35
Equivalent Annualized Return: +28.5%
= (+$310.00/$15,283.35)*(365/26 days)

The downside 'breakeven price' at expiration is at $30.38 ($32.54 - $1.98 - $.18), which is 6.6% below the current market price of $32.54.  This is good downside protection given the attractive potential +28.5% annualized ROI for this investment.

The Covered Calls Advisor has established a set of ten criteria to evaluate potential Covered Calls using a Dividend Capture Strategy.  The minimum threshold desired to establish a position is that at least eight of these ten criteria must be achieved.  As shown in the table below, all ten criteria are achieved for this Bank of America Covered Calls position.