Covered Calls Position Established in the Financial Select Sector SPDR Fund

Today a Covered Calls position was established in the Financial Select Sector SPDR Fund (ticker XLF) by buying 400 shares at $38.29 and simultaneously selling 4 March 25th, 2022 Call options at the $37.00 strike price.  This is a similar position to the Energy Select Sector (XLE) short-term Covered Calls position established earlier this week.  As with XLE, the Covered Calls Advisor's Dividend Capture Strategy was used since there is an intervening quarterly distribution next Monday (March 21st, 2022).  The amount of the XLF ex-distribution is not announced prior to the ex-distribution date, but a conservative estimate based on history of $.16 per share is assumed in the calculations provided below.

As is the case with all Dividend Capture Strategy positions established by the Covered Calls Advisor, an in-the-money strike price was selected, the Delta being 80.0 when this buy/write net debit limit order was transacted this morning.  The time value per share was $.17 = [$37.00 strike price - ($38.29 stock price - $1.46 Call options premium)]. 

Two potential return-on-investment results are: (1) +0.5% absolute return in 4 days (equivalent to a +42.1% annualized return-on-investment) if the position is assigned early on March 18th (i.e. tomorrow) which is the last business day prior to next Monday's ex-distribution date; or (2) +0.9% absolute return in 9 days (equivalent to a +36.3% annualized return-on-investment) if the position is assigned on the March 25th, 2022 options expiration date. 

Financial Select Sector SPDR Fund (XLF) -- New Covered Calls Position

The buy/write transaction was as follows:
03/17/2022 Bought 400 shares of the Financial Select Sector SPDR Fund @ $38.29 per share 
03/17/2022 Sold 4 XLF March 25th, 2022 $37.00 Call options @ $1.46 per share when the Implied Volatility of the Call options was 24.1
03/21/2022 Estimated ex-distribution of $.16 per share

Two possible overall performance results (including commissions) would be as follows:
Covered Calls Cost Basis: $14,734.68
= ($38.29 - $1.46) * 400 shares + $2.68 commission

Net Profit Components:
(a) Options Income: +$584.00
= ($1.46 * 400 shares)
(b) Distribution Income (If XLF shares assigned on day prior to ex-distribution date): +$0.00; or
(b) Distribution Income (If XLF shares assigned on the March 25th options expiration date): +$64.00
=  $.16 per share x 400 shares
(c) Capital Appreciation (If XLF is above $37.00 strike price and early assignment on March 18th, 2021): -$516.00
= ($37.00 - $38.29) * 400 shares; or
(c) Capital Appreciation (If XLF is above $37.00 strike price at the March 25th, 2022 expiration): -$516.00
= ($37.00 - $38.29) * 400 shares

1. Total Net Profit (If XLF shares assigned on last business day prior to March 21st, 2022 ex-distribution date): +$68.00
= (+$584.00 options income +$0.00 dividend income -$516.00 capital appreciation); or
2. Total Net Profit (If XLF shares assigned on March 25th options expiration date): +$132.00
= (+$584.00 options income +$64.00 dividend income -$516.00 capital appreciation)

1. Absolute Return (If XLF shares assigned on last business day prior to ex-distribution date): +0.5%
= +$68.00/$14,734.68
Equivalent Annualized Return: +42.1%
= (+$68.00/$14,734.68)*(365/4 days); or
2. Absolute Return (If XLF shares assigned on March 25th, 2022 options expiration date): +0.9%
= +$132.00/$14,734.68
Equivalent Annualized Return: +36.3%
= (+$132.00/$14,734.68)*(365/9 days)