Established Covered Calls in Abercrombie & Fitch Co.

A Covered Calls position was established in Abercrombie & Fitch Co. (ticker ANF) with a January 31st, 2025 options expiration date.   A net limit buy/write order was executed when 300 shares of Abercrombie were purchased at $128.35 and three January 31st, 2025 Call options at the $120.00 strike price were sold at $10.37 per share.  The time value was $2.02 = [$10.37 Call options premium - ($128.35 stock price - $120.00 strike price)].  The Implied Volatility of these Calls was 42.8 when this transaction was executed and the probability that the Call options will be in-the-money on the options expiration date was 73.7% when this position was established.  As preferred, the next quarterly earnings report on March 5th, 2025 is after the January 31st options expiration date. 

Abercrombie was the #1 ranked stock in my Mid-Cap Value+Profitability+Growth custom stock screener that I developed using my StockRover.com stock screener.  As detailed below, it passed every filter in my screener:

A potential return-on-investment result is +   % absolute return (equivalent to +    % annualized return for the next 15 days) if the stock price is in-the-money (i.e. above the $120.00 strike price) and therefore assigned on the January 31st options expiration date.

Abercrombie & Fitch Co. (ANF) -- New Covered Calls Position

The Buy/Write limit order was executed as follows:
10/20/2021 Bought 300 shares of Abercrombie & Fitch Co. stock @ $38.07 per share 
10/20/2021 Sold 3 A&F November 19th, 2021 $35.00 Call options @ $4.02 per share

A possible overall performance result (including commissions) for this Abercrombie & Fitch Co. Covered Calls position is as follows:
Stock Purchase Cost: $10,217.01
= ($38.07 - $4.02) *300 shares + $2.01 commission

Net Profit:
(a) Options Income: +$1,203.99
= ($4.02 *300 shares) - $2.01 commission
(b) Dividend Income: +$0.00

(c) Capital Appreciation (If 300 ANF shares assigned at $35.00 strike price at expiration): -$921.00
+($35.00 -$38.07) * 300 shares

Total Net Profit (If 300 Abercrombie shares assigned at $35.00 strike price at expiration): 

+$282.99 

= (+$1,203.99 options income +$0.00 dividend income -$921.00) capital appreciation

 

Absolute Return-on-Investment: +2.8%

= +$282.99/$10,217.01

Annualized Return-on-Investment: +32.6%

= (+$282.99/$10,217.01) * (365/31 days)