Covered Call Position Established in Facebook Inc.

A new Covered Call position was established today in Facebook Inc. (FB) by purchasing 100 shares at $266.443 per share and selling one Call option at the $265.00 strike price with a February 5th, 2021 options expiration date for $13.31 per share.  The Call option premium received was very attractive since the Implied Volatility (IV) of the Call was 41.8 when this position was established.  A primary reason for this abnormally high IV for Facebook is because of the elevated uncertainty given that the next quarterly earnings report on January 27th, 2021 is prior to the February 5th options expiration date.  But the Covered Calls Advisor is reasonably confident the earnings will exceed analysts' projections and Facebook would thereby retain its position as the megacap tech stock (among the FAAMG group) with the most attractive valuation metrics profile.

As detailed below, a potential return-on-investment result for this Facebook position is:
+4.7% absolute return in 29 days (equivalent to a +59.0% annualized return-on-investment) if the stock closes above the $265.00 strike price at the February 5th, 2021 options expiration date.
  

Facebook Inc. (FB) -- New Covered Call Position

The Covered Calls Advisor's buy/write limit order was transacted as follows:
01/08/2021 Bought 100 Facebook shares @ $266.443
01/08/2021 Sold 1 Facebook 2/05/2021 $265.00 Call option @ $13.31. 

A possible overall performance result (including commissions) for this Facebook Inc. Covered Call position is as follows:
Covered Call Cost Basis: $25,313.97
= ($266.443 - $13.31) * 100 shares + $.67 commission

Net Profit Components:
(a) Option Income: +$1,331.00
= ($13.31 * 100 shares)
(b) Dividend Income: +$0.00

(c) Capital Appreciation (If FB shares assigned at $265.00 strike price at options expiration): -$144.30
+($265.00 - $266.443) * 100 shares

 Total Net Profit (If Facebook shares assigned at $265.00 strike price at February 5th, 2021 expiration): +$1,186.70

= (+$1,331.00 option income +$0.00 dividend income -$144.30 capital appreciation)

Absolute Return  (If Facebook shares assigned at $265.00 on the Feb. 5th, 2021 expiration date): +4.7%

= +$1,186.70/$25,313.37

Annualized Return-on-Investment: +59.0%

= (+$1,186.70/$25,313.37)*(365/29 days)