Covered Call Position Established in Facebook Inc.

A new Covered Call position was established today in Facebook Inc. (FB) this afternoon by purchasing 100 shares at $325.92 per share and selling one Call option at the $320.00 strike price with a November 19th, 2021 options expiration date for $16.95 per share.  The Call option premium received was very attractive since the Implied Volatility (IV) of the Call was 39.4 when this position was established.  A primary reason for this abnormally high IV for Facebook is because of the elevated uncertainty given the quarterly earnings report after market close today.  The whistleblower testimony along with concerns about the impact of Apple's anti-tracking initiative on Facebook has caused a 17% decline in Facebook's stock price since the beginning of September.  But most analysts believe this decline is excessive given their average price target remains above $400 for Facebook.  The Covered Calls Advisor does not normally establish positions in advance of earnings, but I am reasonably confident that earnings will exceed analysts' projections of $29.5B revenue and $3.19 per share given the continued growing consumption of online advertising by traditionally brick-and-mortar retailers among others.  Facebook would thereby retain its position as the megacap tech stock with the most attractive valuation metrics such as the PEG ratio.  

As detailed below, a potential return-on-investment result for this Facebook position is:
+3.6% absolute return in 26 days (equivalent to a +50.1% annualized return-on-investment) if the stock closes above the $320.00 strike price at the November 19th, 2021 options expiration date.
  

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

The Covered Calls Advisor's buy/write limit order was transacted as follows:
10/25/2021 Bought 100 Facebook shares @ $325.92
10/25/2021 Sold 1 Facebook 11/19/2021 $320.00 Call option @ $16.95. 

A possible overall performance result (including commissions) for this Facebook Inc. Covered Call position is as follows:
Covered Call Cost Basis: $30,897.67
= ($325.92 - $16.95) * 100 shares + $.67 commission

Net Profit Components:
(a) Option Income: +$1,694.33
= ($16.95 * 100 shares) - $.67 commission
(b) Dividend Income: +$0.00

(c) Capital Appreciation (If FB shares assigned at $320.00 strike price at options expiration): -$592.00
+($320.00 - $325.92) * 100 shares

 Total Net Profit (If Facebook shares assigned at $320.00 strike price at November 19th, 2021 expiration): +$1,102.33

= (+$1,694.33 option income +$0.00 dividend income -$592.00 capital appreciation)

Absolute Return  (If Facebook shares assigned at $320.00 on the Nov. 19th, 2021 expiration date): +3.6%

= +$1,102.33/$30,897.67

Annualized Return-on-Investment: +50.1%

= (+$1,102.33/$30,897.67)*(365/26 days)