Truist is a super-regional bank in Southeast U.S. (note: it is the 6th largest bank in the U.S. by market capitalization) that resulted from the merger completed in late 2019 of SunTrust and BB&T banks. Fundamentally, the stock has a very attractive current valuation and technically it is short-term oversold with its RSI(2)=15.9. Twenty-three Wall Street analysts have a current average price target of $40.92 which is +38.1% above today's purchase price.
A potential return-on-investment result for this Truist Financial Covered Calls position is +2.1% absolute return (equivalent to +44.1% annualized return for the next 17 days) if the stock is assigned on the June 16th, 2023 options expiration date.
Truist Financial Corporation (TFC) -- New Covered Calls Position
The transactions were:
5/31/2023 Bought 400 Truist shares @ $29.63
5/31/2023 Sold 4 TFC 6/16/2023 $27.50 Call options @ $2.69
Note: the Implied Volatility of these Call options was very high at 56.9 when this position was established.
A possible overall performance result (including commissions) for this
Truist Covered Calls position is as follows:
Covered Calls Cost Basis: $10,778.68
= ($29.63 - $2.69) * 400 shares + $2.68 commission
Net Profit Components:
(a) Options Income: +$1,073.32
= ($2.69 * 400 shares) - $2.68 commission
(b) Dividend Income (If Truist shares assigned at the June 16th, 2023 expiration): +$0.00
(c) Capital Appreciation (If TFC shares assigned at $27.50 strike price at options expiration): -$852.00
+($27.50- $29.63) * 400 shares
