Covered Calls Established in Gilead Sciences Inc.

A June 30th, 2023 Covered Calls buy/write limit order was executed this afternoon in Gilead Sciences Inc. (ticker GILD) at a net debit price of $75.51 per share.  Four hundred shares were purchased at $77.89 and four June 30th, 2023 $76.00 strike price Call options were sold at $2.38 per share.  The corresponding extrinsic value (i.e. time value) was $.51 per share [$2.38 Call options premium - ($77.89 stock purchase price - $76.00 strike price)].   There is an intervening ex-dividend prior to the options expiration date on June 14th) at $.75 per share (a 3.9% annual dividend yield) which is included in the potential return-on-investment results shown below.  

Gilead Sciences is a California-based biopharmaceutical company that researches, develops, and sells therapies for treating HIV, hepatitis B, hepatitis C, and certain cancers.  They have significant growth drivers in both HIV and oncology that will continue to combat headwinds from declining hepatitis C sales.  Gilead appeared in my Morningstar Wide Moat Outperformers stock screener and the twenty-nine analysts' that cover Gilead have a current target price of $91.38 (+17.3% above today's stock purchase price).

Some key numbers for this Gilead Sciences Covered Calls position are:
Covered Calls Net Investment: $30,201.32
= ($77.89 - $2.38) x 400 shares - $2.68 commissions 

1. If Assigned Early on the Day Prior to the Ex-Dividend Date:
Total Potential Profit: $201.32
= $.51 time value x 400 shares - $2.68 commissions
Days Until the June 14th, 2023 Ex-Dividend Date: 5
Absolute Return-on-Investment: +0.7%
= $201.32 time value profit /$30,210.32 net investment
Annualized Return-on-Investment if Assigned Early: +48.6%
= ($201.32/$30,210.32) x (365/5 days)

2. If Assigned on the June 30th, 2023 Options Expiration Date:
Dividend Income: $300.00
= $.75 per share x 400 shares
Total Potential Profit:  $501.32
= $201.32 time value profit + $300.00 dividend income
Days Until the June 30th, 2023 Options Expiration: 22
Absolute Return-on-Investment if Assigned at Expiration: +1.7%
= $501.32 total profit potential /$30,210.32 net investment
=Annualized Return-on-Investment if Assigned at Expiration: +27.5%
= ($501.32 total profit /$30,210.32) x (365/22 days)

Jeff Partlow (The Covered Calls Advisor)
partlow@cox.net