Covered Calls Position Established in Comcast Corporation

Just prior to market close today, a Covered Calls position was established in Comcast Corporation (ticker CMCSA) by buying 400 shares at $46.60 and simultaneously selling 4 April 14th, 2022 Call options at the $45.00 strike price.  A moderately in-the-money strike price was selected with a Delta of 72.1 when this buy/write transaction was executed.  The time value per share was $.44 = [$45.00 strike price - ($46.60 stock price - $2.04 Call options premium)].  The Covered Calls Advisor's Dividend Capture Strategy was used since there is an intervening quarterly dividend of $.27 per share on April 5th, 2022 which is prior to the April 14th options expiration date.

Comcast met all four criteria preferred by the Covered Calls Advisor in the current market environment for stocks to evaluate further as potential Covered Calls investments, namely:

1. Attractive Valuation -- Free Cash Flow Yield is 8.7%
2. Meets All Criteria in One of the Covered Calls Advisor's Stock Screeners -- Appeared in the Large-Cap Value+Profitability+Growth Screener
3. Future Earnings Growth -- FY22 earnings estimated to exceed FY21 by +6.8% and estimated future long-term annual growth rate is 13.3%
4. Target Price Above Current Stock Price -- The average target price of 32 brokerage firm analysts covering Comcast is $60.90 (30.7% above today's stock purchase price)    
   

Two potential return-on-investment results are: (1) +1.0% absolute return in 13 days (equivalent to a +27.3% annualized return-on-investment) if the position is assigned early on April 4th (the last business day prior to the April 5th ex-dividend date); or (2) +1.6% absolute return in 23 days (equivalent to a +25.0% annualized return-on-investment) if the position is assigned on the April 14th, 2022 options expiration date. 

Comcast Corporation (CMCSA) -- New Covered Calls Position

The buy/write transaction was as follows:
03/23/2022 Bought 400 shares of Comcast Corporation @ $46.60 per share 
03/23/2022 Sold 4 Comcast April 14th, 2022 $45.00 Call options @ $2.04 per share.  The Implied Volatility of these Call options was 23.2 when this transaction was executed.
04/05/2022 Upcoming ex-dividend of $.27 per share

Two possible overall performance results (including commissions) would be as follows:
Covered Calls Cost Basis: $17,826.68
= ($46.60 - $2.04) * 400 shares + $2.68 commission

Net Profit Components:
(a) Options Income: +$813.32
= ($2.04 * 400 shares) - $2.68 commission
(b) Dividend Income (If Comcast shares assigned on day prior to ex-distribution date): +$0.00; or
(b) Dividend Income (If Comcast shares assigned on April 14th options expiration date): +$108.00
=  $.27 per share x 400 shares
(c) Capital Appreciation (If Comcast shares are above $45.00 strike price and early assignment occurs on April 4th, 2021): -$640.00
= ($45.00 - $46.60) * 400 shares; or
(c) Capital Appreciation (If Comcast is above $45.00 strike price at the April 14th, 2021 expiration): -$640.00
= ($45.00 - $46.60) * 400 shares

1. Total Net Profit (If Comcast shares assigned on last business day prior to April 5th ex-dividend date): +$173.32
= (+$813.32 options income +$0.00 dividend income -$640.00 capital appreciation); or
2. Total Net Profit (If Comcast shares assigned on April 14th options expiration date): +$281.32
= (+$813.32 options income +$108.00 dividend income -$640.00 capital appreciation)

1. Absolute Return (If Comcast shares assigned on last business day prior to ex-distribution date): +1.0%
= +$173.32/$17,826.68
Equivalent Annualized Return: +27.3%
= (+$173.32/$17,826.68)*(365/13 days); or
2. Absolute Return (If Comcast shares assigned on April 14th options expiration date): +1.6%
= +$281.32/$17,826.68
Equivalent Annualized Return: +25.0%
= (+$281.32/$17,826.68)*(365/23 days)