Today a Covered Calls position was established in General Motors (ticker symbol GM) when the Covered Calls Advisor's buy/write limit order was executed -- 300 shares were purchased at $49.24 and 3 March 4th, 2022 Call options were sold at $3.98 at the $46.00 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 76.9, 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 43.8 when the position was established and there is no quarterly earnings report or ex-dividend date prior to the options expiration date.
According to Reuters Research, General Motors has a Strong Buy rating by the 19 analysts covering the company. Relative to all companies rated, seventeen analysts rate it as either Buy or Outperform, 2 rate it Neutral, and none rate it as either Underperform or Strong Sell. Their current average target price is $75.44 which is +53.2% above today's $49.24 purchase price. GM's valuation is attractive with a current P/E ratio of only 7.2 and their 2022 earnings per share are expected to slightly exceed 2021s results.
Some key numbers for this GM Covered Calls position are:
Covered Calls Cost Basis: $13,580.01
Profit if Assigned on Expiration Date: $219.99
Days Until Expiration: 18
Absolute Return-on-Investment: +1.6%
Annualized Return-on-Investment: +32.8%
Instead of showing the detailed calculations for the numbers highlighted above, the Covered Calls Advisor will now often present this simplified presentation of the key numbers for newly established positions. Occasionally, I will still provide the detailed calculations that you have been used to seeing, 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 investing reading and research activities.
As always, I do encourage your email questions related to Covered Calls which I try to reply to expeditiously.
Regards and Godspeed,
Jeff Partlow (The Covered Calls Advisor)
