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 $25.00 strike price when the stock was at $27.94.   This is the second Bank of America Covered Calls position and the 500 shares purchased today doubles the total shares owned.  This new position was established this morning when the Dow was down 965 points and the implied volatility in the Calls sold had spiked up to 66.0, so the options income received from selling the Calls was substantial.  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 $.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 +2.7% absolute return-on-investment for the next 22 days (equivalent to +44.6% on an annualized return basis) if Bank of America stock closes above the $25.00 strike price on the March 20th options expiration date.

Bank of America Corp. (BAC) -- New Covered Calls Position
The transactions were:
02/28/2020 Bought 500 shares of Bank of America stock @ $27.94 per share 
02/28/2020 Sold 5 BAC March 20th, 2020 $25.00 Call options @ $3.42 per share
Note: The Open Interest in these Calls was 480 contracts.
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: $12,263.35
= ($27.94 - $3.42)* 500 shares + $3.35 commission

Net Profit Components:
(a) Options Income: +$1,710.00
= ($3.42 * 500 shares)
(b) Dividend Income: +$90.00
= $.18 per share * 500 shares 
(c) Capital Appreciation (If Bank of America stock is above $25.00 strike price at Mar 20th expiration): -$1,470.00
= ($25.00 -$27.94) * 500 shares

Potential Total Net Profit (If BAC stock assigned at expiration): +$330.00
= (+$1,710.00 options income +$90.00 dividend income -$1,470.00 capital appreciation)

Absolute Return: +2.7%
= +$330.00/$12,263.35
Equivalent Annualized Return: +44.6%
= (+$330.00/$12,263.35)*(365/22 days)

The downside 'breakeven price' at expiration is at $24.34 ($27.94 - $3.42 - $.18), which is 12.9% below the current market price of $27.94.  This is excellent downside protection given the attractive potential +44.6% annualized ROI for this investment.