GM has a Strong Buy rating by the 19 analysts covering the company. 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 +82.4% above today's $41.35 stock price when the March 18th, 2018 $42.50 Call options were sold. GM's valuation is attractive with a current P/E ratio of only 5.8 and their 2022 earnings per share are expected to be approximately even with their 2021 results.
Uber is also rated as a Strong Buy by the forty analysts now covering it. Their average current target price is $59.91 (+93.7% above today's $30.93 price when the 3/18/2022 $32.00 Calls were sold). Just yesterday, they announced a 22% increase in their Q1 2022 EBITDA guidance range to $130 to $150 million. In February, their ride-sharing volume was up 25% on a month-to-month basis. And for their delivery business, they reported their first profitable quarter ever in Q4 2021 and their annual run rate through February 2022 is continuing to trend higher still.
The details-to-date of both of these Covered Calls positions to-date are provided below.
1. General Motors Corporation (GM) -- Continuation of Covered Calls Position
The original buy/write transaction was as follows:
2/15/2022 Bought 300 shares of GM stock @ $49.24 per share
2/15/2022 Sold 3 GM March 4th, 2022 $46.00 Call options @ $3.98 per share
Note: The Implied Volatility of these Calls was 43.8
3/4/2018 Three GM Calls expired out-of-the-money and the 300 GM shares were retained in the Covered Calls Advisor Portfolio.
3/08/2022 Rolled Down-and-Out the GM Covered Calls position by selling 3 GM March 18th, 2022 $42.50 Call options at $1.15 per share. Note: the GM stock price was $41.35 when this transaction was executed.
Two possible overall performance results (including commissions) would be as follows:
Covered Calls Cost Basis: $13,580.01
= ($49.24 - $3.98) * 300 shares + $2.01 commission
(a) Options Income: +$1,534.98
= ($3.98 + $1.15) * 300 shares - $4.02 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If GM share price unchanged at $41.35 on 3/18/2022 expiration date): -$2,367.00
= ($41.35 -$49.24) * 300 shares; or
(c) Capital Appreciation (If shares above $42.50 strike price at the March 18th options expiration): -$2,022.00
= ($42.50 -$49.24) * 300 shares
1. Potential Net Profit (If GM share price unchanged at $41.35 on 3/18/2022 expiration date): -$802.02
= (+$1,534.98 options income +$0.00 dividend income - $2,367.00 capital appreciation)
2. Potential Net Profit (If GM price is above the $42.50 strike price at the March 18th options expiration): -$487.02
= (+$1,534.98 options income +$0.00 dividend income - $2,022.00 capital appreciation)
1. Absolute Return-on-Investment (If GM share price unchanged at $41.35 on 3/18/2022 expiration date): -5.9%
= -$802.02/$13,580.01
Equivalent Annualized Return-on-Investment (If GM price unchanged at options expiration): -67.4%
= (-$802.02/$13,580.01) * (365/32 days)
2. Absolute Return-on-Investment (If GM price is above $42.50 strike price at the March 18th options expiration): -3.6%
= -$487.02/$13,580.01
Equivalent Annualized Return-on-Investment (If assigned on the March 18th, 2022 options expiration date): -40.9%
= (-$487.02/$13,580.01)*(365/32 days)
2. Uber Technologies Inc. (UBER) -- Continuation of the Covered Calls Position
The original net debit buy/write limit order was executed as follows:
2/14/2022 Bought 300 shares of Uber Technologies Inc. stock @ $34.58 per share
2/14/2022 Sold 3 Uber March 4th, 2022 $32.00 Call options @ $3.47 per share
Note: this was a simultaneous Buy/Write transaction
3/4/2018 Three Uber Calls expired out-of-the-money and the 300 Uber Technologies shares were retained in the Covered Calls Advisor Portfolio.
3/08/2022 Rolled Out the Uber Covered Calls position by selling 3 Uber March 18th, 2022 $32.00 Call options at $1.12 per share. Note: Uber's stock price was $30.93 when this transaction was executed.
Two possible overall performance results (including commissions) would be as follows:
Covered Calls Cost Basis: $9,335.01
= ($34.58 - $3.47) * 300 shares + $2.01 commission
Net Profit Components:
(a) Options Income: +$1,038.99
= ($3.47 + $1.12) * 300 shares - $4.02 commission
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If Uber stock is unchanged at $30.93 on the March 18th expiration): -$1,095.00
= ($30.93 -$34.58) * 300 shares; OR
(c) Capital Appreciation (If Uber stock is assigned at the $32.00 strike price on the March 18th options expiration date): -$774.00.00
= ($32.00 -$34.58) * 300 shares
1. Potential Total Net Profit (If Uber stock is unchanged at $30.93 on the March 18th options expiration date): -$56.01
= (+$1,038.99 options income +$0.00 dividend income -$1,095.00 capital appreciation); OR
2. Potential Total Net Profit (If Uber stock is assigned at the $32.00 strike price on the March 18th options expiration date): +$264.99
= (+$1,038.99 options income +$0.00 dividend income -$774.00 capital appreciation)
1. Absolute Return-on-Investment (If Uber stock is unchanged at $30.93 on the March 18th options expiration date): -0.6%
= -$56.01/$9,335.01
Equivalent Annualized Return-on-Investment (If Uber stock is unchanged at $30.93 on the March 18th expiration): -6.6%
= (-$56.01/$9,335.01)*(365/33 days); OR
2. Absolute Return-on-Investment (If Uber stock is assigned at the $32.00 strike price on the March 18th options expiration date): +2.8%
= +$264.99/$9,335.01
Equivalent Annualized Return-on-Investment (If Uber stock is assigned at the $32.00 strike price on the March 18th options expiration date): +31.4%
= (+$264.99/$9,335.01)*(365/33 days)
