Covered Calls Established in SPDR S&P 500 ETF

Early this morning when the Dow Jones average was up 150 points, a second Covered Call position was established in the SPDR S&P 500 ETF (SPY) with a March 20th, 2020 options expiration date.  100 shares of the SPDR S&P 500 ETF were purchased at $250.45 and one Call option was sold at $23.93 at the $235.00 strike price.  Given the stock market's sharp decline in 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 SPY position.

Incredibly, the Implied Volatility of this SPY Call option was at 103.9 and the S&P 500 Volatility Index (VIX) was near its historic high at 74.3.  Therefore this situation provided an especially attractive opportunity for a large return-on-investment result during the next week until the option expiration date.      

As detailed below, the potential return-on-investment results is +3.7% absolute return in 8 days (equivalent to a +170.8% annualized return-on-investment)


SPDR S&P 500 ETF (SPY) -- New Covered Call Position

The transactions were as follows:
03/13/2020 Bought 100 shares of S&P 500 ETF @ $250.45 per share 
03/13/2020 Sold 1 SPDR S&P 500 ETF March 20, 2020 $235.00 Call option @ $23.93 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: $22,652.67
= ($250.45 - $23.93) * 100 shares + $.67 commission

Net Profit Components:
(a) Options Income: +$2,393.00
= ($23.93 * 100 shares)
(b) Dividend Income: +$0.00 
(c) Capital Appreciation (If SPY is above $235.00 strike price at March 20th expiration): -$1,545.00
= ($235.00 -$250.45) * 100 shares

Total Net Profit: +$848.00
= (+$2,393.00 options income +$0.00 dividend income -$1,545.00 capital appreciation)

Absolute Return: +3.7%
= +$848.00/$22,652.67
Equivalent Annualized Return: +170.8%
= (+$848.00/$22,652.67)*(365/8 days)