This is the fourth Covered Calls position established at the September 30th quarterly options expiration date and I have not yet established a position with an options expiration date later than September 30th. I prefer to establish new Covered Calls with a duration of less than 30 days (note: the average holding period for my positions during the past 12 months has been 22.1 days). The October 2022 monthly options expiration date is October 21st which, as of today, is 36 days away. The two primary reasons I prefer shorter duration Covered Calls are: (1) they provide higher potential annualized return-on-investment potentials because of Theta--that is, the rate of time value decay in options premiums increases the closer the option is to its expiration date; and (2) shorter duration positions provide more frequent opportunities to re-evaluate current stock holdings and to modify ongoing strike prices given the volatility of stock prices and our outlook for the individual stocks we own.
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 67.4 which is an aproximate two-thirds probability that the Call option will be in-the-money on the options expiration date. In addition, the Implied Volatility of the Calls was high at 50.5 when the position was established (well above the current VIX of 27.7), so the options premium received for selling this Call was very attractive. As preferred, the next earnings report on Oct 24th is after the Sept 30th options expiration date.
Some key numbers for this Meta Platforms Inc. Covered Call position are:
Covered Call Net Investment: $13,658.67
Profit if Assigned on Expiration Date: $341.33
Days Until September 30th, 2022 Options Expiration: 15
Absolute Return-on-Investment if Assigned at Expiration: +2.5%
Annualized Return-on-Investment if Assigned at Expiration: +60.8%
Best Wishes,
Jeff Partlow (The Covered Calls Advisor)
partlow@cox.net
