A December 16th, 2022 Covered Calls buy/write limit order was executed today in Bank of America (ticker BAC) at a net debit price of $35.13 per share. Five hundred shares were purchased at $36.80 and five December 16th, 2022 $35.50 strike price Call options were sold at $1.67 per share. The corresponding extrinsic value (i.e. time value) was $.37 per share
[$1.67 Call options premium - ($36.80 stock purchase price - $35.50
strike price)]. There is an intervening ex-dividend prior to the options expiration date in two days (on December 1st) at $.22 per share which is included in the potential return-on-investment results shown below. The Implied Volatility of the Call options was 27.9 and the Delta was 72.6 when this position was established. And as preferred, there is no quarterly earnings report prior to the options expiration date.
Some key numbers for this Bank of America Covered Calls position are:
Covered Calls Net Investment: $17,568.35
Time Value Profit if Assigned on Expiration Date: $181.65
Dividend Income if Assigned on the Options Expiration Date: $110.00
Total Potential Profit if Assigned ($181.65 time value profit + $110.00 dividend income): $291.65
Days Until the December 16th, 2022 Options Expiration: 18
Absolute Return-on-Investment if Assigned at Expiration: +1.7%
Annualized Return-on-Investment if Assigned at Expiration: +33.7%
Jeff Partlow (The Covered Calls Advisor)
partlow@cox.net
