As detailed below for this Nucor Covered Calls position, the maximum potential return-on-investment result is +2.7% absolute
return in 24 days (equivalent to a + 41.0% annualized
return-on-investment) if the stock price is above the $97.50 strike price on the July 15th, 2022 options expiration date. These returns will be achieved as long as the Nucor price is
above the $97.50 strike price at options expiration. If the stock declines
below the strike price, the breakeven price of $94.92 per share ($107.21 stock purchase price - $11.79 Call options price sold - $.50 ex-dividend amount)
provides a substantial 11.5% downside protection below today's stock purchase
price.
Nucor Corporation (NUE) -- New Covered Calls Position
The simultaneous buy/write transaction today was as follows:
6/22/2022 Bought 200 Nucor Corporation shares @ $107.21
6/22/2022 Sold 2 Nucor 7/15/2022 $97.50 Call options @ $11.79 per share. Note: the Implied Volatility of the Calls was 53.6 when this transaction
was executed which (as I prefer) was well above the S&P 500 Volatility Index (VIX) of
30.1 when this transaction was executed.
6/29/2022 Ex-dividend of $.50 per share
A possible overall performance result (including commissions) for this Nucor Covered Calls position are as follows:
Covered Calls Cost Basis: $19,085.34
= ($107.21 - $11.79) * 200 shares + $1.34 commissions
Net Profit Components:
(a) Options Income: +$2,356.66
= ($11.79 * 200 shares) - $1.34 commissions
(b) Dividend Income: +$100.00 = $.50 per share x 200 shares
(c) Capital Appreciation (If Nucor shares assigned at $97.50 strike price at options expiration): -$1,942.00
+($97.50 stock selling price - $107.21 stock purchase price) * 200 shares
