Established Covered Calls Position in The Walt Disney Company

A Covered Calls position was established in The Walt Disney Company (DIS) when the Covered Calls Advisor's buy/write limit order at a net debit limit price of $83.66 was executed. Two hundred shares were purchased at $88.80 and two June 16th, 2023 Call options were sold at $5.14 at the $85.00 strike price.  The time value was $1.34 per share = [$85.00 strike price - ($88.80 stock purchase price - $5.14 Call options price)].   Given my current cautious stock market outlook, a moderately in-the-money Covered Call position was established with a Delta of 71.4 which approximates a 71.4% probability this position will be in-the-money and therefore assigned on the June 16th, 2023 options expiration date.  As desired, there is no earnings report prior to the options expiration date.

This Disney investment is largely a belief in the extraordinary leadership of Bob Iger.  In his prior 15 years as CEO (that concluded in February 2020), his operating and acquisition decisions were very highly praised and which resulted in a +256% stock price appreciation during his tenure as CEO.  Now that he has returned as CEO for at least a couple more years, I am confident his knowledge of the company combined with his exceptional decision-making ability will bode well for the near-term results of the company and its stock price. Wall Street analysts' agree since their current average target price is $120.78 (+36.0% above today's purchase price).

As detailed below, the potential return-on-investment results for this Disney Covered Calls position is +1.6% absolute return (equivalent to +25.3% annualized return-on-investment for the next 23 days) if the stock is assigned on the June 16th options expiration date.

The Walt Disney Company (DIS) -- New Covered Calls Position

The buy/write transaction was:
5/25/2023 Bought 200 The Walt Disney Company shares @ $88.80
5/25/2023 Sold 2 DIS 6/16/2023 $85.00 Call options @ $5.14 per share.

A possible overall performance result (including commissions) for this Disney Covered Calls position is as follows:
Covered Call Net Investment: $16,733.34
= ($88.80 - $5.14) * 200 shares + $1.34 commission

Net Profit:
(a) Options Income: +$1,026.66
= ($5.14 * 200 shares) - $1.34 commission
(b) Dividend Income (If DIS shares assigned at the June 16th, 2023 expiration): +$0.00
= ($0.00 dividends per share x 200 shares)
(c) Capital Appreciation (If DIS shares assigned at $85.00 strike price at expiration): -$760.00
+($85.00 - $88.80) * 200 shares

Total Net Profit (If options exercised on the 6/16/2023 options expiration date): +$266.66

= (+$1,026.66 options income +$0.00 dividend income -$760.00 capital appreciation)

Absolute Return-on-Investment (If Disney shares assigned at $85.00 at the June 16th, 2023 expiration): +1.6%

= +$266.66/$16,733.34

Annualized Return-on-Investment (If 200 shares assigned at $85.00 at the June 16th, 2023 options expiration): +25.3%

= (+$266.66/$16,733.34) * (365/23 days)