Established Covered Calls in Micron Technology Inc.

A Covered Calls position was established in Micron Technology Inc. (ticker MU) with a September 17th, 2021 options expiration date.   A buy/write transaction entered at a net debit of $71.48 was executed when 300 shares of Micron were purchased at $73.48 and three Sept 17th, 2021 Call options at the $72.50 strike price were sold at $2.00 per share. The Implied Volatility of these Calls was 28.7 today when this transaction was executed and the Delta was 61.2 which approximates a 61.2% probability of the Call options being in-the-money at the options expiration date.  The next quarterly earnings report on September 28th is after the September 17th options expiration date. 

A prior Covered Calls position in Micron expired in-the-money last Friday, so the shares were assigned.  The Covered Calls Advisor decided to re-establish a position in Micron today and it is now the sole position in the Information Technology sector in the Portfolio.  Micron's finances are strong and they are also very highly rated by analysts.  Reuters Research indicates that currently 31 analysts have a Buy or Outperform rating on the stock, 4 have a Hold, and none have an Underperform or Strong Sell; and their current average target price is $114.81 which is +56.2% above today's $73.48 purchase price. 

As detailed below, a potential return-on-investment result is +1.4% absolute return (equivalent to +47.0% annualized return for the next 11 days) if the stock price is in-the-money (i.e. above the $72.50 strike price) and therefore assigned on the September 17th options expiration date.

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

The Buy/Write transaction was as follows:
09/07/2021 Bought 300 shares of Micron Technology Inc. stock @ $73.48 per share 
09/07/2021 Sold 3 Micron Sept 17th, 2021 $72.50 Call options @ $2.00 per share

A possible overall performance result (including commissions) for this Micron Technology Inc. Covered Calls position is as follows:
Stock Purchase Cost: $21,446.01
= ($73.48 - $2.00) *300 shares + $2.01 commission

Net Profit:
(a) Options Income: +$597.99
= ($2.00 *300 shares) - $2.01 commission
(b) Dividend Income: +$0.00

(c) Capital Appreciation (If 300 Micron shares assigned at $72.50 strike price at expiration): -$294.00
+($72.50 -$73.48) * 300 shares

Total Net Profit (If 300 Micron shares assigned at $72.50 strike price at expiration): +$303.99 = (+$597.99 options income +$0.00 dividend income -$294.00) capital appreciation

 

Absolute Return-on-Investment: +1.4%

= +$303.99/$21,446.01

Annualized Return-on-Investment: +47.0%

= (+$303.99/$21,446.01) * (365/11 days)