Covered Calls Established in Bank of America Corporation and Kraft Heinz Company

This afternoon, Covered Calls were established in Bank of America Corporation (ticker symbol BAC) and Kraft Heinz Company (KHC).  

1. For Bank of America, 500 shares were purchased at $43.89 and 5 March 18th, 2022 Call options were sold at $3.31 at the $41.00 strike price.  Given the Covered Calls Advisor's current cautious Overall Market Meter outlook, a moderately in-the-money Covered Calls position was established -- the Delta was 79.2, which closely approximates the probability that the Call options will be in-the-money on the options expiration date.  In addition, the Implied Volatility of the Calls was 36.7 when the position was established.   BAC's stock goes ex-dividend this Thursday (3/3/2022) at $.21 per share (1.9% annualized dividend yield).  There is no quarterly earnings report prior to the March 18th options expiration date.

Some key numbers for this Bank of America Covered Calls position are:
Covered Calls Cost Basis: $20,293.35
Profit if Assigned on Expiration Date: $311.65
Days Until Expiration: 19
Absolute Return-on-Investment: +1.5%
Annualized Return-on-Investment: +29.5%

 

2. For Kraft Heinz Company, 300 shares were purchased at $38.86 and 3 March 25th, 2022 Call options were sold at $1.48 at the $38.00 strike price.  The Delta was 62.8 and the Implied Volatility was 25.7 when this position was transacted. The stock goes ex-dividend on March 10th, 2022 at $.40 per share (4.1% annualized dividend yield).  There is no earnings report prior to the March 25th options expiration date.

Some key numbers for this Kraft Heinz Covered Calls position are:

Covered Calls Cost Basis: $13,580.01

(a) Profit if Assigned Early (on day before 3/10/2022 ex-dividend): $183.99
Days Until Ex-Dividend Date: 10
Absolute Return-on-Investment: +1.6%
Annualized Return-on-Investment: +59.9%; OR

(b) Profit if Assigned on 3/25/2022 Expiration Date: $303.99
Days Until Expiration: 26
Absolute Return-on-Investment: +2.7%
Annualized Return-on-Investment: +38.0%

Instead of showing the detailed calculations for the numbers highlighted above, the Covered Calls Advisor will now often present only some key numbers for newly established positions.  Occasionally, I will still provide the detailed calculations that you have been used to seeing so you can see how the return-on-investment calculations are made; but I hope you can appreciate my need to save some of the time required in typing these posts, which is more productively used in my investment reading and research activities. 

As always, I do encourage your email questions related to Covered Calls which I try to reply to expeditiously. 

Jeff Partlow--The Covered Calls Advisor
partlow@cox.net