Covered Call Position Established in Facebook Inc.

This afternoon, when the Dow Jones average was down about 2,100 points, a Covered Call position was established in Facebook Inc. (ticker FB) with an April 17th, 2020 options expiration date.  100 shares of Facebook were purchased at $151.06 and one Call option was sold at $23.32 at the $135.00 strike price.  Given the stock market's sharp decline today and during the past few weeks along with the Covered Calls Advisor's Slightly Bearish overall market outlook, a moderately in-the-money Covered Call was established for this position. 

As detailed below, the potential return-on-investment results is +5.7% absolute return in 33 days (equivalent to a +62.9% annualized return-on-investment).  The details of this position and a potential return-on-investment result are as follows:


Facebook Inc. (FB) -- New Covered Call Position

The transactions were as follows:
03/16/2020 Bought 100 shares of Facebook Inc. @ $151.06 per share 
03/16/2020 Sold 1 Facebook April 17, 2020 $135.00 Call option @ $23.32 per share
Note 1: the Implied Volatility of the Call option was 79.6 and the next quarterly earnings report is after the 4/17/2020 expiration date
Note 2: this was a simultaneous Buy/Write transaction.

A possible overall performance result (including commissions) would be as follows:
Covered Calls Cost Basis: $12,774.67
= ($151.06 - $23.32) * 100 shares + $.67 commission

Net Profit Components:
(a) Options Income: +$2,332.00
= ($23.32 * 100 shares)
(b) Dividend Income: +$0.00 
(c) Capital Appreciation (If Facebook stock is above $135.00 strike price at the April 17th expiration): -$1,606.00
= ($135.00 -$151.06) * 100 shares

Total Net Profit: +$726.00
= (+$2,332.00 options income +$0.00 dividend income -$1,606.00 capital appreciation)

Absolute Return: +5.7%
= +$726.00/$12,774.67
Equivalent Annualized Return: +62.9%
= (+$726.00/$12,774.67)*(365/33 days)

These returns will be achieved as long as the stock is above the $135.00 strike price at assignment.  If the stock declines below the strike price, the breakeven price of $127.74 ($151.06 -$23.32) provides 15.4% downside breakeven protection below today's purchase price.