Established Covered Calls Position in Ralph Lauren Corporation

Today a Covered Calls position was established in Ralph Lauren Corporation (ticker symbol RL) when the Covered Calls Advisor's buy/write net debit limit order at $108.20 per share executed -- 300 shares were purchased at $113.66 and three July 16th, 2021 $110.00 Call options were sold at $5.46.  This is a moderately in-the-money (Delta of 66.4 when this position was established) Covered Calls position with the $113.66 stock purchase price being 3.3% above the $110.00 strike price. 

The potential return-on-investment result detailed below for this position includes a quarterly $.6875 per share ex-dividend (2.3% annual dividend yield) in two days on June 24th, 2021 (this Thursday).   An additional consideration for this position is that the next quarterly earnings report is on July 29th is after the July 16th options expiration date -- the Covered Calls Advisor's preferred circumstance. 

As detailed below, the potential return-on-investment result is +2.3% absolute return (equivalent to +33.5% annualized return-on-investment over the next 25 days) if the stock is assigned on the July 16th options expiration date.

Ralph Lauren Corporation (RL) -- New Covered Calls Position

The buy/write transaction was:
06/22/2021 Bought 300 Ralph Lauren shares @ $113.66
06/22/2021 Sold 3 Ralph Lauren 07/16/2021 $110.00 Call options @ $5.46.  As required by the Covered Calls Advisor for positions in individual stocks, the Implied Volatility of these Calls at 27.8 exceeded the current S&P 500 Volatility Index (VIX) of 17.2.
06/24/2021 Upcoming quarterly ex-dividend of $.6875 per share

The overall performance result (including commissions) if this Ralph Lauren Corporation Covered Calls position closes above the $110.00 strike price on the July 16th options expiration date would be as follows:

Stock Purchase Cost: $32,462.01
= ($113.66 - $5.46) *300 shares + $2.01 commission

Net Profit:
(a) Options Income: +$1,635.99
= ($5.46 *300 shares) - $2.01 commission
(b) Dividend Income (If RL shares assigned at July 16th, 2021 expiration): +$206.25
= ($.6875 dividend per share x 300 shares)
(c) Capital Appreciation (If RL shares assigned at $110.00 strike price at expiration): -$1,098.00
+($110.00-$113.66) * 300 shares

Total Net Profit (If RL shares assigned at $110.00 at July 16th, 2021 expiration): +$744.24

= (+$1,635.99 options income +$206.25 dividend income - $1,098.00 capital appreciation)
 

Absolute Return (If RL shares assigned at $140.00 at July 16th, 2021 expiration date): +2.3%

= +$744.24/$32,462.01

Annualized Return (If RL shares assigned at $140.00 at July 16th 2021 options expiration): +33.5%

= (+$744.24/$32,462.01)*(365/25 days)