Established Covered Calls in Micron Technology Inc.

A Covered Calls position was established in Micron Technology Inc. (ticker MU) with a February 4th, 2022 options expiration date.   A buy/write transaction entered at a net debit of $78.21 was executed when 300 shares of Micron were purchased at $83.66 and three Feb 4th, 2022 Call options at the $80.00 strike price were sold at $5.45 per share. The Implied Volatility of these Calls was 49.9 today when this transaction was executed and the Delta was 68.8 which approximates a 68.8% probability of the Call options being in-the-money at the options expiration date.  The next quarterly earnings report on March 30th is after the February 4th options expiration date. 

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 $109.60 which is +31.0% above today's $83.66 purchase price. 

As detailed below, a potential return-on-investment result is +2.3% absolute return (equivalent to +55.5% annualized return for the next 15 days) if the stock price is in-the-money (i.e. above the $80.00 strike price) and therefore assigned on the February 4th options expiration date.

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

The Buy/Write transaction was as follows:
01/21/2022 Bought 300 shares of Micron Technology Inc. stock @ $83.66 per share 
01/21/2022 Sold 3 Micron February 4th, 2022 $80.00 Call options @ $5.45 per share

A possible overall performance result (including commissions) for this Micron Technology Inc. Covered Calls position is as follows:
Stock Purchase Cost: $23,465.01
= ($83.66 - $5.45) *300 shares + $2.01 commission

Net Profit:
(a) Options Income: +$1,632.99
= ($5.45 *300 shares) - $2.01 commission
(b) Dividend Income: +$0.00

(c) Capital Appreciation (If 300 Micron shares assigned at $80.00 strike price at expiration): -$1,098.00
+($80.00 -$83.66) * 300 shares

Total Net Profit (If 300 Micron shares assigned at $80.00 strike price at expiration): +$534.99 = (+$1,632.99 options income +$0.00 dividend income -$1,098.00) capital appreciation

 

Absolute Return-on-Investment: +2.3%

= +$534.99/$23,465.01

Annualized Return-on-Investment: +55.5%

= (+$534.99/$23,465.01) * (365/15 days)