As detailed below, the potential return-on-investment result is +1.7% absolute return in 24 days (equivalent to a +25.6% annualized return-on-investment).
Boston Scientific Corp.(BSX) -- New Covered Calls Position
The Buy/Write transaction was as follows: 08/26/2020 Bought 300 shares of Boston Scientific Corp. stock @ $39.12 per share
08/26/2020 Sold 3 Boston Scientific Sept 18th, 2020 $38.00 Call options @ $1.75 per share
Note: the Implied Volatility of these Calls was 26.5 today when this transaction was made.
A possible overall performance results (including commissions) if the stock price is above the $38.00 strike price at expiration would be as follows:
Covered Call Cost Basis: $11,213.01
= ($39.12 - $1.75) * 300 shares + $2.01 commission
Net Profit Components:
(a) Options Income: +$525.00
= ($1.75 * 300 shares)
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If Boston Scientific stock is above $38.00 strike price at Sept 18th expiration): -$336.00
= ($38.00 - $39.12) * 300 shares
Total Net Profit: +$189.00
= (+$525.00 options income +$0.00 dividend income -$336.00 capital appreciation)
Absolute Return: +1.7%
= +$189.00/$11,213.01
Equivalent Annualized Return: +25.6%
= (+$189.00/$11,213.01)*(365/24 days)
The downside 'breakeven price' at expiration is at $37.37 ($39.12 - $1.75), which is 4.5% below the current market price of $39.12.
