Established Covered Calls in Micron Technology Inc.

This afternoon, a new short-term (10 calendar days) Covered Calls position was established in Micron Technology Inc. (ticker MU) with an August 21st, 2020 options expiration date. A prior two-week position in Micron expired in-the-money at the August 7th expiration so the 500 shares of Micron were sold at the $48.00 strike price (see details here).  For this new Covered Calls position, five Calls were sold at $1.96 at the $47.00 strike price when the stock price was $48.34. 

Micron's 2nd quarter earnings report was 4 weeks ago.  Despite the excellent results, Micron's stock price remains virtually unchanged.  Their future is bright since they are strong in key growth areas of SSDs, Cloud, Smartphones, Graphics/Game, and 5G with their mix of 2/3 DRAM and 1/3 NAND chips.  Their 3-year CEO, Sanjay Mehrotra, is a brilliant chips engineer who has over 70 patents and co-founded SanDisk.  On the earnings conference call, he was confident and visionary in describing Micron's future diversification projects and the company's focus on developing "higher margin" products.  The semiconductor industry is constantly changing and highly competitive.  Micron's commitment to a Research and Development-to-Revenue ratio of 13% will help them achieve their goals of developing new, cutting edge semiconductor chips.  

Also, Micron's finances are strong and they are also very highly rated by analysts.  Reuters indicates that currently 25 analysts have a Buy or Outperform rating, 10 have a Hold, and 1 has a Strong Sell, and their average target price is $65 (34% above the current price).  

As detailed below, the potential return-on-investment result is +1.3% absolute return in 10 days (equivalent to a +48.8% annualized return-on-investment).  

Micron Technology Inc. (MU) -- New Covered Calls Position

The Buy/Write transaction was as follows:
08/12/2020 Bought 500 shares of Micron Technology Inc. stock @ $48.34 per share 
08/12/2020 Sold 5 Micron Aug 21st, 2020 $47.00 Call options @ $1.96 per share

A possible overall performance results (including commissions) if the stock price is above the $47.00 strike price at expiration would be as follows:
Covered Call Cost Basis: $23,193.35
= ($48.34 - $1.96) * 500 shares + $3.35 commission

Net Profit Components:
(a) Options Income: +$980.00
= ($1.96 * 500 shares)
(b) Dividend Income: +$0.00 
(c) Capital Appreciation (If Micron stock is above $47.00 strike price at August 21st expiration): -$670.00
= ($47.00 - $48.34) * 500 shares

Total Net Profit: +$310.00
= (+$980.00 options income +$0.00 dividend income -$670.00 capital appreciation)

Absolute Return: +1.3%
= +$310.00/$23,193.35
Equivalent Annualized Return: +48.8%
= (+$310.00/$23,193.35)*(365/10 days)

The downside 'breakeven price' at expiration is at $46.38 ($48.34 - $1.96), which is 4.1% below the current market price of $48.34.