Qualcomm Inc. goes ex-dividend on May 31st, 2023 at $.80 per share (3.1% annualized dividend yield at the current stock price), so this dividend is included in the potential return-on-investment results shown below. There is no earnings report prior to the options expiration date. The average analysts' target price is currently $133.81 which is +28.2% above today's stock purchase price.
Two potential return-on-investment results for this Qualcomm Covered Calls position are: (a) +1.0% absolute return (equivalent to +46.2% annualized
return for the next 8 days) if the stock is assigned early [i.e. on May 30th which is the last trading day prior to the May 31st ex-dividend date]; OR (b) +1.8% absolute return (equivalent to +36.8% annualized return over the next 18 days) if the stock is assigned on its June 9th, 2023 options expiration date. I would not be disappointed, in fact I would be pleased, if the position is closed out early on the day prior to the ex-dividend date since the annualized return-on-investment of +46.2% would exceed the annualized return-on-investment of +36.8% if the position was instead closed out on its June 9th options expiration date.
Qualcomm Inc.(QCOM) -- New Covered Calls Position
The simultaneous buy/write transactions was as follows:
5/23/2023 Bought 200 shares of Qualcomm stock @ $104.35 per share.
5/23/2023 Sold 2 Qualcomm June 9th, 2023 $101.00 Call options @ $4.37 per share.
5/31/2023 Upcoming ex-dividend at $.80 per share
The overall performance results (including commissions) would be as follows:
Covered Calls Net Investment: $19,994.66
= ($104.35 - $4.37) * 200 shares + $1.34 commission
Net Profit Components:
(a) Options Income: +$872.66
= ($4.37 * 200 shares) - $1.34 commission
(b) Dividend Income (If Qualcomm stock assigned early on the day prior to the May 31st ex-dividend date): $0.00
(b) Dividend Income (If Qualcomm stock assigned on the June 9th, 2023 options expiration date): +$160.00
= $.80 dividend per share x 200 shares
(c) Capital Appreciation (If Qualcomm stock assigned early on the day prior to the May 31st ex-dividend date): -$670.00
= ($101.00 - $104.35) * 200 shares
(c) Capital Appreciation (If Qualcomm stock is above $101.00 strike price and therefore assigned at the June 9th expiration date): -$670.00
= ($101.00 - $104.35) * 200 shares
1. Potential Net Profit (If Qualcomm shares assigned early on 5/30/2023, the day prior to the May 31st ex-dividend date): +$202.66
= (+$872.66 options income +$0.00 dividend income - $670.00 capital appreciation)
2. Potential Net Profit (If QCOM price is above the $101.00 strike price at the June 9th options expiration): +$362.66
= (+$872.66 options income +$160.00 dividend income - $670.00 capital appreciation)
1. Absolute Return (If Qualcomm shares assigned early on the day prior to the May 31, 2023 ex-dividend date): +1.0%
= +$202.66/$19,994.66
Equivalent Annualized Return (If assigned early on day prior to ex-div date): +46.2%
= (+$202.66/$19,994.66) * (365/8 days)
2. Absolute Return (If QCOM price is above $101.00 strike price at the June 9th options expiration): +1.8%
= +$362.66/$19,994.66
Equivalent Annualized Return (If assigned on the 6/9/2023 options expiration date): +36.8%
= (+$362.66/$19,994.66) * (365/18 days)
At least eight of the nine metrics used in the Covered Calls Advisor's Dividend Capture Strategy spreadsheet (see below) must be 'YES' prior to establishing a new Covered Calls position using the Covered Calls Advisor's Dividend Capture strategy. As shown below, all nine criteria are achieved for this Qualcomm Inc. Covered Calls position.
