Today a Covered Calls position was established in The Walt Disney Company (ticker symbol DIS) when the Covered Calls Advisor's buy/write limit order was executed -- 200 shares were purchased at $92.60 and 2 July 15th, 2022 Call options were sold at $4.59 at the $90.00 strike price. The corresponding extrinsic value (i.e. time value) was $1.99 per share [$4.59 Call options premium - ($92.60 stock purchase price - $90.00 strike price)]. The $1.99 per share will be profit if the stock remains above the $90.00 strike price (and therefore assigned) on the July 15th options expiration date.
Given the Covered Calls Advisor's current Bearish Overall Market Meter outlook, a moderately in-the-money Covered Calls position was established -- the Delta was 64.9, which closely approximates a 64.9% probability that the Call options will be in-the-money on the options expiration date. In addition, the Implied Volatility of the Calls was high at 40.9 when the position was established, well above the current VIX of 30.1.
Disney was recently added to my Watchlist and today declined to a level that I believe is a good entry point for establishing an initial position that could evolve into a long-term holding. Revenues this quarter are expected to be slightly higher than during the same quarter 3 years ago (before the pandemic) when Disney's stock price was in the $140s.
Some key numbers for this Walt Disney Company Covered Calls position are:
Covered Calls Cost Basis: $18,518.66
Profit if Assigned on Expiration Date: $396.66
Days Until July 15th, 2022 Options Expiration: 16
Absolute Return-on-Investment if Assigned at Expiration: +2.1%
Annualized Return-on-Investment if Assigned at Expiration: +48.9%
As always, I encourage your email questions related to the Covered Calls investing strategy.
Jeff Partlow (The Covered Calls Advisor)
partlow@cox.net
