Established Covered Calls in D.R. Horton Inc.

This morning, a Covered Calls position has been established in D.R. Horton Inc. (ticker DHI) with a July 17th, 2020 options expiration date. Three D.R. Horton Call options were sold at $4.60 at the $50.00 strike price when the stock price was $53.43.  The Delta was 75.3 when this transaction was executed -- a moderately in-the-money position which is consistent with the Covered Calls Advisor's current cautious market outlook.  As preferred, the next earnings report on July 28th is after the July 17th options expiration date.

D.R. Horton is the largest homebuilder in America by market cap. Importantly, it is considered the best-in-class operator in its industry and has the highest exposure to the critically important entry-level buyers (67% of closings), lowest debt leverage, and least on-balance sheet land risk.

As detailed below, the potential return-on-investment result is +2.4% absolute return in 19 days (equivalent to a +46.0% annualized return-on-investment).  

D.R. Horton Inc. (DHI) -- New Covered Calls Position

The Buy/Write transaction was as follows:
06/29/2020 Bought 300 shares of D.R. Horton Inc. stock @ $53.43 per share 
06/29/2020 Sold 3 D.R. Horton July 17th, 2020 $50.00 Call options @ $4.60 per share
Note: The Implied Volatility of the Call option was 47.8 when this transaction executed. 

A possible overall performance result (including commissions) would be as follows:
Covered Call Cost Basis: $14,651.01
= ($53.43 - $4.60) * 300 shares + $2.01 commission

Net Profit Components:
(a) Options Income: +$1,380.00
= ($4.60 * 300 shares)
(b) Dividend Income: +$0.00 
(c) Capital Appreciation (If D.R. Horton stock is above $50.00 strike price at July 17th expiration): -$1,029.00
= ($50.00 - $53.43) * 300 shares

Total Net Profit: +$351.00
= (+$1,380.00 options income +$0.00 dividend income -$1,029.00 capital appreciation)

Absolute Return: +2.4%
= +$351.00/$14,651.01
Equivalent Annualized Return: +46.0%
= (+$351.00/$14,651.01)*(365/19 days)

The downside 'breakeven price' at expiration is at $48.83 ($53.43 - $4.60), which is 8.6% below the current market price of $53.43.