Today a Covered Call position was established in FedEx Corporation (ticker symbol FDX) when the Covered Calls Advisor's buy/write limit order was executed. One hundred shares were purchased at $213.49 and 1 September 9th, 2022 Call option was sold at $9.67 at the $205.00 strike price--so, the corresponding time value was $1.18 per share [$9.67 Call option premium - ($213.49 stock purchase price - $205.00 strike price)]. Given the Covered Calls Advisor's current cautious Overall Market Meter outlook, a moderately in-the-money Covered Call position was established -- the Delta was 78.8, which closely approximates the probability that the Call options will be in-the-money on the options expiration date. There is an upcoming ex-dividend on Sept.1st of $1.15 per share (2.2% annual dividend yield), which is included in the potential return-on-investment results detailed below.
Fedex meets all five of the metrics currently favored for new positions in the Covered Calls Advisor Portfolio:
The buy/write transaction was:
08/30/2022 Bought 100 shares of Fedex Corporation stock @ $213.49 per share
08/30/2022 Sold 1 Sept 9th, 2022 $205.00 Call option @ $9.67 per share
Note: The Implied Volatility of the Call option was 28.4.
09/01/2022 Upcoming ex-dividend of $1.15 per share
A possible overall performance result (including commissions) for this Fedex Corp. Covered Call position is as follows:
Covered Call Cost Basis: $20,382.67
= ($213.49 - $9.67) * 100 shares + $.67 commission
Net Profit Components:
(a) Option Income: +$966.33
= ($9.67 * 100 shares) - $.67 commission
(b) Dividend Income (If Fedex stock assigned at Sept 9th, 2022 expiration): +$115.00
= ($1.15 dividend per share x 100 shares)
(c) Capital Appreciation (If shares assigned at $205.00 strike price on the options expiration date): -$849.00
+($205.00 - $213.49) * 100 shares
