An October 21st, 2022 Covered Calls buy/write limit order was executed today in Qualcomm Inc. (ticker QCOM) at 10:03a.m. at a net debit price of $112.96 per share. Two hundred shares were purchased at $121.77 and two Oct. 21st, 2022 $115.00 strike price Call options were sold at $8.81 per share. The corresponding extrinsic value (i.e. time value) was $2.04 per share [$8.81 Call options premium - ($121.77 stock purchase price - $115.00 strike price)]. The Implied Volatility of the Calls was high at 49.0 and the approximate probability of assignment at options expiration was 72.9% when this transaction was executed. There is no ex-dividend and, as I prefer, no earnings report prior to the options expiration date.
When this position was established it was 5.9% in-the-money which is consistent with my current cautious Covered Calls approach during a bearish market environment. Like most semiconductor industry companies, Qualcomm's stock price has declined substantially (-35% for Qualcomm) so far this year, but their current valuation is attractive--for example, their trailing twelve months P/E ratio is now 10.2. In addtion, analysts' current average target price is $183.95 (+51.1% above today's purchase price).
Some key numbers for this Qualcomm Inc. Covered Calls position are:
Covered Calls Net Investment: $22,594.68
Profit if Assigned on Expiration Date: $405.32
Days Until October 21st, 2022 Options Expiration: 15
Absolute Return-on-Investment if Assigned at Expiration: +1.8%
Annualized Return-on-Investment if Assigned at Options Expiration: +43.7%
