Continuation of Covered Calls Positions in Micron Technology Inc. and Prudential Financial Inc.

Today, the Covered Calls positions in Micron Technology Inc. (ticker MU) and Prudential Financial Inc. (ticker PRU) was continued by selling Call options against the shares held in the Covered Calls Advisor Portfolio.  Last Friday, existing Covered Calls in both companies expired with the stock price out-of-the-money and the Covered Calls Advisor decided today to continue both Covered Calls positions.  For Micron, 3 July 30th $75.00 Calls were sold at $1.52 per share against the 300 MU shares owned.  For Prudential, 2 August 20th, 2021 $100.00 Calls were sold at $1.95 per share against the 200 PRU shares owned.  There has been no negative news on either company since these positions were originally established so the Covered Calls Advisor's bullish outlook persists. 

As detailed below, the potential return-on-investment results if assigned at options expiration are: 

• Micron Technology:  +3.8% absolute return (equivalent to +32.8% annualized return for 42 days).
  

• Prudential Financial:  +3.1% absolute return (equivalent to +21.4% annualized return for 53 days).

1. Micron Technology Inc. (MU) -- Continuation of Covered Calls Position

The Buy/Write transaction was as follows:
06/18/2021 Bought 300 shares of Micron Technology Inc. stock @ $77.00 per share 
06/18/2021 Sold 3 Micron July 16th, 2021 $77.50 Call options @ $3.28 per share
07/16/2021 3 MU Call options expired out-of-the-money so 300 MU shares remain in the Covered Calls Advisor Portfolio.
07/20/2021 Continued Covered Calls position by selling 3 MU July 30th, 2021 $75.00 Call options @ $1.52 when stock price was $74.56.

A possible overall performance result (including commissions) for this Micron Technology Inc. Covered Calls position is as follows:
Stock Purchase Cost: $22,118.01
= ($77.00 - $3.28) *300 shares + $2.01 commission

Net Profit:
(a) Options Income: +$1,435.98
= (($3.28 + $1.52) *300 shares) - $4.02 commissions
(b) Dividend Income: +$0.00

(c) Capital Appreciation (If 300 Micron shares assigned at $75.00 strike price at 8/20/2021 options expiration): -$600.00
+($75.00 -$77.00) * 300 shares

Total Net Profit (If 300 Micron shares assigned at $75.00 strike price at expiration): +$835.98

= (+$1,435.98 options income +$0.00 dividend income -$600.00 capital appreciation)

 

Absolute Return (If 300 Micron shares assigned at $75.00 strike price at expiration): +3.8%

= +$835.98/$22,118.01

Annualized Return (If MU shares assigned at $77.50 at July 16th 2021 expiration): +32.8%

= (+$835.98/$22,118.01) *(365/42 days)

2. Prudential Financial Inc. (PRU) -- Continuation of Covered Calls Position

The buy/write transaction was as follows:
06/28/2021 Bought 200 shares of Prudential Financial stock @ $102.49 per share 
06/28/2021 Sold 2 Prudential July 16th, 2021 $100.00 Call options @ $3.63 per share
Note: The Implied Volatility of the Call options was 24.2 when this transaction was executed.
07/16/2021 2 PRU Call options expired out-of-the-money so 200 PRU shares remain in the Covered Calls Advisor Portfolio.
07/20/2021 Continued Covered Calls position by selling 2 PRU August 20th, 2021 $100.00 Call options @ $1.95 per share when PRU stock price was $97.07.

A possible overall performance result (including commissions) would be as follows:
Covered Call Cost Basis: $19,773.34
= ($102.49 - $3.63) * 200 shares + $1.34 commission

Net Profit Components:
(a) Option Income: +$1,113.32
= [($3.63 + $1.95) * 200 shares)] - $2.68 commissions
(b) Dividend Income: +$0.00 
(c) Capital Appreciation (If PRU stock is above $100.00 strike price at August 20th, 2021 expiration): -$498.00
= ($100.00 -$102.49) * 200 shares

Total Net Profit: +$615.32
= (+$1,113.32 Call options income +$0.00 dividend income -$498.00 capital appreciation)

Absolute Return-on-Investment: +3.1%
= +$615.32/$19,773.34
Equivalent Annualized Return-on-Investment: +21.4%
= (+$615.32/$19,773.34)*(365/53 days)