This morning at 9:50a.m. my buy/write limit order was executed in Mosaic Company (ticker MOS). Four hundred shares were purchased at $44.71 and 4 January 27th, 2023 Call options were sold at $2.59 per share at the $43.00 strike price, so the potential time value profit was $.88 per share [$2.59 options income - ($44.71 stock purchase price - $43.00 strike price)] when this position was established.
Mosaic is based in the U.S. and is a worldwide leading phosphate and potash fertilizer company. Mosaic is in the Materials sector, so this Covered Calls position is considered to be a replacement for the current Alcoa Covered Calls position, which is also in the Materials sector and which is very likely to be assigned on its options expiration date tomorrow. Given my current Overall Market Meter viewpoint of Slightly Bearish, an in-the-money Covered Calls position was established in Mosaic with a Delta of 68.3 when today's buy/write order was transacted.
Currently, I continue to evaluate companies as potential investments by using five valuation-oriented criteria, and Mosaic meets these criteria:
As detailed below, the potential return-on-investment results for this Mosaic Co. Covered Calls position is: +2.1% absolute return (equivalent to +47.3% annualized return-on-investment for the next 16 days) if the stock is assigned on the January 27th, 2023 options expiration date.
1. Mosaic Company (MOS) -- New Covered Calls Position The buy/write transaction was:
1/12/2023 Bought 400 Mosaic Co. shares @ $44.71 per share
1/12/2023 Sold 4 MOS 1/27/2023 $43.00 Call options @ $2.59 per share. The Implied Volatility of these Calls was 42.1 when this transaction was executed.
A possible overall performance result (including commissions) if this position is assigned on its options expiration date is as follows:
Covered Calls Net Investment: $16,850.68
= ($44.71 - $2.59) * 400 shares + $2.68 commission
Net Profit:
(a) Options Income: +$1,033.32
= ($2.59 * 400 shares) - $2.68 commission
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If Mosaic shares assigned at $43.00 strike price at expiration): -$684.00
+($43.00 - $44.71) * 400 shares
