New Positions Established in Alphabet Inc. and Lowes Companies Inc.

Today, new positions were established in Alphabet Inc. (ticker GOOGL) and Lowes Companies Inc. (LOW) with 100% Cash-Secured Puts sold for both positions -- one Alphabet April 17th $1,050 strike Put at $36.50 when the stock price was $1,102.15 and three Lowes April 17th $80.00 Puts at $3.40 when the stock price was $86.03.

As detailed below, the potential return-on-investment results are: 

• Alphabet Inc. : +3.5% absolute return in 17 days (equivalent to a +74.6% annualized return-on-investment); and
• Lowes Companies Inc. : +4.2% absolute return in 17 days (equivalent to a +91.2% annualized return-on-investment)

As with today's investments, additional cash will be invested in Covered Calls (or 100% Cash-Secured Puts) gradually in the days and weeks ahead.  Implied Volatility remains very high (so the options premiums are also very high) and therefore the potential return-on-investment results are very attractive.  I continue to track key coronavirus statistics daily and the chart below gives some encouragement that daily new cases might be beginning to show signs of a possible plateauing:

The Covered Calls Advisor will continue to deploy available cash into additional investments in the weeks ahead as daily new cases shows more definitive signs of peaking and thereafter eventually declining.    


1.  Alphabet Inc. (GOOGL) -- New 100% Cash-Secured Put Position

The transaction was as follows:
03/30/2020 Sold 1 April 17, 2020 $1,050.00 100% Cash-Secured Put option @ $36.50 per share 

A possible overall performance result (including commissions) would be as follows:
100% Cash-Secured Cost Basis: $105,000.73
= $1,050.00 per share * 100 shares + $.73 commission

Net Profit Components:
(a) Options Income: +$3,650.00
= ($36.50 * 100 shares)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If Alphabet is above $1,050.00 strike price at Apr 17th expiration): +$0.00
= ($1,050.00 -$1,050.00) * 100 shares

Potential Total Net Profit (If Alphabet price is above $1,050.00 strike price at April 17th options expiration): +$3,650.00
= (+$3,650.00 options income +$0.00 dividend income + $0.00 capital appreciation)

Absolute Return: +3.5%
= +$3,650.00/$105,000.73
Equivalent Annualized Return: +74.6%
= (+$3,650.00/$105,000.73)*(365/17 days)



2. Lowes Companies Inc. (LOW) -- New 100% Cash-Secured Puts Position
The transaction was as follows:
03/30/2020 Sold 3 April 17, 2020 $80.00 100% Cash-Secured Put options @ $3.40 per share 
Note: The Open Interest in these Puts was 2,547 contracts

A possible overall performance result (including commissions) would be as follows:
100% Cash-Secured Cost Basis: $24,002.01
= $80.00 per share * 300 shares + $2.01 commissions

Net Profit Components:
(a) Options Income: +$1,020.00
= ($3.40 per share * 300 shares)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If Lowes Companies stock is above $80.00 strike price at Apr 17th expiration): +$0.00
= ($80.00 -$80.00) * 300 shares

Potential Total Net Profit (If Lowes price is above $80.00 strike price at April 17th options expiration): +$1,020.00
= (+$1,020.00 options income +$0.00 dividend income + $0.00 capital appreciation)

Absolute Return: +4.2%
= +$1,020.00/$24,002.01
Equivalent Annualized Return: +91.2%
= (+$1,020.00/$24,002.01)*(365/17 days)