As detailed below, a potential return-on-investment result is +0.8% absolute return-on-investment (equivalent to +12.1% annualized return-on-investment for the 25 days holding period) if the stock price is in-the-money (i.e. above the $45.00 strike price) and therefore assigned on the August 18th, 2023 options expiration date.
Delta Air Lines Inc. (DAL) -- Covered Calls Position Continued
The Buy/Write transaction was as follows:
7/24/2023 Bought 500 shares of Delta Air Lines Inc. @ $47.49 per share
7/24/2023 Sold 5 DAL August 4th, 2023 $46.00 Call options @ $1.93 per share
8/4/2023 Five DAL Calls expired out-of-the-money so the 500 shares remained in the Covered Calls Advisor Portfolio.
8/7/2023 Continued this Delta Air Lines Inc. Covered Calls position by selling 5 Delta August 18th, 2023 Call options at the $45.00 strike price for $.56 per share. The FXI share price was $44.93 when these Calls were sold and their Implied Volatility was 39.6.
A possible overall performance result (including commissions) for this Delta Air Lines Inc. Covered Calls position is as follows:
Delta Air Lines Covered Calls Net Investment: $22,783.35
= ($47.49 - $1.93) * 500 shares + $3.35 commission
Net Profit Potential:
(a) Options Income: +$1,433.30
= ($1.93 + $.95) * 500 shares - $6.70 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If 500 Delta Air Lines shares assigned at $45.00 strike price at the 8/18/2023 options expiration date): -$1,245.00
+($45.00 - $47.49) * 500 shares
Potential Total Net Profit (If 500 Delta Air Lines shares assigned at the $45.00 strike price upon options expiration): +$188.30
= (+$1,433.30 options income +$0.00 dividend income -$1,245.00 capital appreciation)
Absolute Return-on-Investment Potential: +0.8%
= +$188.30/$22,783.35
Annualized Return-on-Investment Potential: +12.1%
= (+$188.30/$22,783.35) * (365/25 days)
