A January 6th, 2023 Covered Calls buy/write limit order was executed today in U.S. Bancorp (ticker USB) at a net debit price of $40.76 per share. Four hundred shares were purchased at $42.30 and four January 6th, 2023 $41.00 strike price Call options were sold at $1.54 per share. The corresponding extrinsic value (i.e. time value) was $.24 per share
[$1.54 Call options premium - ($42.30 stock purchase price - $41.00
strike price)]. There is an intervening ex-dividend prior to the options expiration date one week from today (on December 29th) at $.48 per share which is included in the potential return-on-investment results shown below. The Implied Volatility of the Call options was 21.4 and the Delta was 74.3 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 U.S. Bancorp Covered Calls position are:
Covered Calls Net Investment: $16,301.32
Time Value Profit if Assigned on Expiration Date: $93.32
Dividend Income if Assigned on the Options Expiration Date: $192.00
Total Potential Profit if Assigned ($93.32 time value profit + $192.00 dividend income): $285.32
Days Until the January 6th, 2023 Options Expiration: 16
Absolute Return-on-Investment if Assigned Early (on day prior to ex-dividend date): +0.6%
Annualized Return-on-Investment if Assigned Early: +30.8%
Absolute Return-on-Investment if Assigned at Expiration: +1.8%
Annualized Return-on-Investment if Assigned at Expiration: +39.9%
Jeff Partlow (The Covered Calls Advisor)
partlow@cox.net
