Covered Calls Position Closed for CVS Health Corporation

Last Friday, the Covered Calls position in CVS Health Corporation (ticker CVS) expired out-of-the-money since the closing stock price Friday of $66.29 was well below the $70.00 strike price.  CVS Health's stock price increased today along with the overall market, and I decided to close out the position by selling the 300 CVS shares at $67.67.  The resulting return-on-investment loss for this short-term (i.e. 12 days) position is detailed below.

CVS Health Corp. (CVS) -- New Covered Calls Position

The buy/write transaction was:
10/18/2023 Bought 300 CVS shares @ $70.91
10/18/2023 Sold 3 CVS 10/27/2023 $70.00 Call options @ $1.32
10/19/2023 Quarterly ex-dividend of $.605 per share
10/27/2023 3 CVS $70.00 Call options expired out-of-the-money and the 300 CVS shares remained in the Covered Calls Advisor Portfolio. 

10/30/2023 This CVS Covered Calls position was closed out by selling 300 shares at $67.77 per share.

The overall performance results (including commissions) for this CVS Health Covered Calls position was as follows:
CVS Covered Calls Net Investment: $20,879.01
= ($70.91 - $1.32) * 300 shares + $2.01 commission

Net Profit Components:
(a) Options Income: +$393.99
= ($1.32 * 300 shares) - $2.01 commission
(b) Dividend Income: +$181.50
= ($.605 dividend per share x 300 shares)

(c) Capital Appreciation (300 CVS shares sold at $67.67 per share: -$972.00
= +($67.67 - $70.91) * 300 shares

Total Net Loss: -$396.51

= (+$393.99 options income +$181.50 dividend income -$972.00 capital appreciation)

Absolute Return-on-Investment: -1.9%

= -$396.51/$20,879.01

Annualized Return-on-Investment: -57.8%

= (-$396.51/$20,879.01) * (365/12 days)

Established Covered Calls in Las Vegas Sands Corporation

Today, a buy/write limit order was entered in Las Vegas Sands Corporation (ticker LVS) to buy 400 shares and simultaneously sell 4 Call options at the November 17th, 2023 expiration and at the $45.00 strike price. The net debit limit price for my order was $44.28 and this order was executed at 2:51pm when 400 shares were purchased at $47.20 and 4 November 17th, 2023 Call options were sold for $2.92 per share. Therefore a maximum potential time value profit of $.72 per share = [$2.92 options premium - ($47.20 stock price - $45.00 strike price)] is available for this position.  

This position uses the Covered Calls Advisor's Dividend Capture Strategy since Las Vegas Sands has an upcoming quarterly ex-dividend of $.20 per share on Monday, November 6th which is prior to the November 17th options expiration date.  This is equivalent to an absolute annual dividend yield of 1.7% and an equivalent annualized dividend yield of 7.4% = [($.20/$47.20) x (365/21 days to expiration)].  This dividend is included in the detailed return-on-investment calculations below.  Either an early assignment on Friday, November 3rd (the last trading day prior to the ex-dividend date) or on the November 17th options expiration date would be desirable to the Covered Calls Advisor given the potential annualized return on investments for either outcome.  Importantly to the Covered Calls Advisor, there is no quarterly earnings report prior to the options expiration date since the next earnings report on January 24th, 2024 is after the 11/17/2023 options expiration date.

As shown on the table at the bottom of this post, all nine criteria of the Dividend Capture Strategy are met with this position.  Even if the Las Vegas Sands stock price declines somewhat during the next 21 days until the options expiration date, if the stock closes above the $45.00 strike price, then a very satisfactory annualized-return-on-investment of +35.8% will be achieved.  The Delta for these Call options was 71.7 when this position was established which approximates the probability of 71.7% that the position will be in-the-money at market close on the options expiration date.  Analysts' average target price is $66.05 (+39.9% above today's stock purchase price).  

As detailed below, two potential return-on-investment results are: 

•  +1.6% absolute return (equivalent to +58.8% annualized return-on-investment for the next 10 days) if the stock is assigned early (on the last business day prior to the November 6th ex-dividend date); or  
  

• +2.1% absolute return (equivalent to +35.8% annualized return-on-investment over the next 21 days) if the stock is assigned on the November 17th, 2023 options expiration date.

Las Vegas Sands Corporation (LVS) -- New Covered Calls Position
The buy/write transaction was:
10/27/2023 Bought 400 Las Vegas Sands shares @ $47.20
10/27/2023 Sold 4 LVS 11/17/2023 $45.00 Call options @ $2.92 per share.
Note: Implied Volatility (IV) of the Call options was at 35.4 when this position was transacted which, as preferred, is above the current VIX of 21.4.   
11/6/2023 Upcoming quarterly ex-dividend of $.20 per share

Two possible overall performance results (including commissions) for this Las Vegas Sands Corp. Covered Calls position are as follows:
Covered Calls Net Investment: $17,714.68
= ($47.20 - $2.92) * 400 shares + $2.68 commission

Net Profit Components:
(a) Options Income: +$1,165.32
= ($2.92 * 400 shares) - $2.68 commission
(b) Dividend Income (If LVS Call options exercised early on Nov. 3rd, 2023, the last business day prior to the Nov. 6th ex-div date): +$0.00; or
(b) Dividend Income (If LVS stock assigned at the November 17th, 2023 options expiration): +$80.00
= ($.20 dividend per share x 400 shares)

(c) Capital Appreciation (If Las Vegas Sand's Call options assigned early on Nov. 6th): -$880.00

+($45.00 - $47.20) * 400 shares; or
(c) Capital Appreciation (If shares assigned at $45.00 strike price at the 11/17 options expiration): -$880.00
+($45.00 - $47.20) * 400 shares

1. Total Net Profit [If option exercised early (business day prior to the Nov. 6th ex-dividend date)]: +$285.32

= (+$1,165.32 options income +$0.00 dividend income -$880.00 capital appreciation); or

2. Total Net Profit (If LVS's shares assigned at $45.00 at the November 17th, 2023 expiration): +$365.32

= (+$1,165.32 +$80.00 -$880.00)

1. Potential Absolute Return-on-Investment [If option exercised on business day prior to ex-dividend date]: +1.6%

= +$285.32/$17,714.68

Potential Annualized Return (If option exercised early): +58.8%

= (+$285.32/$17,714.68) * (365/10 days); or

2. Potential Absolute Return-on-Investment (If LVS's shares assigned on November 17th options expiration date): +2.1%

= +$365.32/$17,714.68

Potential Annualized Return (If Las Vegas Sand's shares assigned at $45.00 at the Nov. 17th, 2023 expiration): +35.8%

= (+365.32/$17,714.68) * (365/21 days)

Either outcome provides an attractive return-on-investment result for this Las Vegas Sands investment.  These returns will be achieved as long as the stock is above the $45.00 strike price at assignment.  However, if the stock declines below the strike price, the breakeven price of $44.08 ($47.20 -$2.92 -$.20) provides 6.6% downside protection below today's stock purchase price.

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 Las Vegas Sands Corporation Covered Calls position.

Covered Calls Position Established in Citigroup Inc.

Today, a Covered Calls position was established in Citigroup Inc. (ticker symbol C) with the purchase of 500 shares at $38.55 per share and five November 10th, 2023 Call options were sold for $1.44 per share at the $37.50 strike price.  Given the Covered Calls Advisor's currently Neutral Overall Market Meter sentiment, a slightly in-the-money Covered Calls positions was established.  The Delta of the Calls was 68.0 when this buy/write transaction was executed which approximates the probability of assignment on the November 10th, 2023 options expiration date.  

Citigroup reported their 2023 Q3 earnings twelve days ago and they exceeded analysts' estimates by $.42 per share and their current P/E Ratio is only 6.1.  In addition, their current Price-to-Tangible Book Value of 0.4 is at their lowest level of the past 5 years and is also by far the lowest of all major U.S.-based mega-cap banks.  CEO Jane Fraser is providing strong leadership and is committed to divesting losing businesses and improving key overall bank metrics.   The average target price of the analysts following Citigroup is $52.46 (+36.1% above today's purchase price).  Finally, Citigroup is one of the top two banks currently recommended by the top-ranked Banking analyst by Institutional Investor (Mike Mayo) -- the other company being JPMorgan Chase.     

Most mid- to large-cap companies in the Financial Sector provide only modest growth prospects, but they often pay 2.0%+ annual dividend yields.  Consequently, the Covered Calls Advisor is targeting opportunities to use the Dividend Capture Strategy in all Financial Sector Covered Calls positions.  Citi has announced that their next ex-dividend date will be 11/03/2022 and at $.53 per share which is a 5.5% annual dividend yield at its current price.  This new November 10th Citigroup Covered Calls position continues the Dividend Capture Strategy of often selling in-the-money monthly Covered Calls for one of the six U.S. mega-cap banks (Bank of America, Citigroup, JPMorgan Chase, Wells Fargo, Goldman Sachs, and Morgan Stanley) during each options expiration month:
(JPMorgan Chase quarterly for Jan, Apr, July, and Oct options expirations;
Citigroup, Wells Fargo, and Morgan Stanley for Feb, May, Aug, and Nov options expirations; and Bank of America and Goldman Sachs for Mar, Jun, Sep, and Dec options expirations).  This is the second mega-cap bank now held in the Covered Calls Advisor Portfolio using my Dividend Capture Strategy -- the other position being Morgan Stanley.

Two potential return-on-investment results are: (a) +1.1% absolute return (equivalent to +42.6% annualized return for the next 9 days) if the stock is assigned early [on the last trading day prior to the 11/3/2023 ex-dividend date]; OR (b) +2.5% absolute return (equivalent to +56.5% annualized return over the next 16 days) if the stock is assigned on the November 10th options expiration date. 

Citigroup Inc. (C) -- New Covered Calls Position
The transactions were:
10/25/2023 Bought 500 Citigroup shares @ $38.55
10/25/2023 Sold 5 Citigroup 11/10/2023 $37.50 Call options @ $1.44 per share.
Note: the Implied Volatility of these Call options was 27.1 when this position was established.
11/3/2023 Upcoming quarterly ex-dividend of $.53 per share

Two possible overall performance results (including commissions) for this
Citigroup Covered Calls position are as follows:
Covered Calls Net Investment: $18,558.35
= ($38.55 - $1.44) * 500 shares + $3.35 commission

Net Profit Components:
(a) Options Income: +$720.00
= ($1.44 * 500 shares)
(b) Dividend Income (If option exercised early on the business day prior to the ex-div date): +$0.00; or
(b) Dividend Income (If Citi shares assigned at the Nov. 10th, 2023 expiration): +$265.00
= ($.53 dividend per share x 500 shares)
(c) Capital Appreciation (If Citigroup shares assigned early): -$525.00
+($37.50 strike price - $38.55 stock purchase cost) * 500 shares; or
(c) Capital Appreciation (If Citi shares assigned at $37.50 strike price at options expiration): -$525.00
+($37.50- $38.55) * 500 shares

1. Total Net Profit [If option exercised on November 2nd, 2023 (the last business day prior to the November 3rd ex-dividend date)]: +$195.00

= (+$720.00 options income +$0.00 dividend income -$525.00 capital appreciation); or

2. Total Net Profit (If Citi shares assigned at $37.50 at the November 10th, 2023 options expiration): +$460.00

= (+$720.00 +$265.00 -$525.00)

1. Absolute Return (If Citigroup options exercised early on the business day prior to the expiration date): +1.1%

= +$195.00/$18,558.35

Annualized Return (If option exercised early): +42.6%

= (+$195.00/$18,558.35) * (365/9 days); or

2. Absolute Return (If Citigroup shares assigned at $37.50 at the Nov. 10th, 2023 expiration): +2.5%

= +$460.00/$18,558.35

Annualized Return (If Citi stock assigned at $37.50 at the Nov. 10th expiration date): +56.5%

= (+$460.00/$18,558.35) * (365/16 days)

Either outcome would provide a good return-on-investment result.  These returns will be achieved as long as the stock is above the $37.50 strike price at assignment.  If the stock declines below the strike price, the breakeven price of $36.58 ($38.55 -$1.44 -$.53) provides 5.1% downside protection below today's stock purchase price.

Continuation of Covered Calls Position in Match Group Inc.

The Covered Calls positions in Match Group Inc. (ticker MTCH) closed out-of-the-money on its options expiration date last Friday, so the Calls expired and shares remained in the Covered Calls Advisor Portfolio.  This afternoon, I decided to continue this Covered Calls position by selling Call options to roll out to the November 17th, 2023 monthly options expiration date at the $38.00 strike price when the stock price was trading at $36.74 and the Delta was 43.4.  This position is currently held at a loss so this rollout transaction is an attempt to repair it back toward breakeven. The transactions-to-date for this position as well as the potential return-on-investment results if this position is assigned on its 11/17/2023 expiration date are as follows:

Match Group Inc. (MTCH) -- Continuation of Covered Calls Position

The buy/write transaction was:
9/18/2023 Bought 400 Match Group Inc. shares @ $42.78
9/18/2023 Sold 4 MTCH 9/29/2023 $41.00 Call options @ $2.26 per share.
9/29/2023 400 Match Group shares closed out-of-the-money so 4 Calls expired and 400 MTCH shares remain in the Covered Calls Advisor Portfolio.

10/9/2023 Continued Covered Calls position by selling 4 Match Group 10/20/2023 Call options at the $38.50 strike price for $.64 per share when the stock price was $37.20.

10/20/2023 400 Match Group shares closed out-of-the-money so 4 Calls expired and 400 MTCH shares remain in the Covered Calls Advisor Portfolio.

10/24/2023 Continued Covered Calls position by selling 4 Match Group 11/17/2023 Call options at the $38.00 strike price for $1.52 per share when the stock price was $36.74.  The Implied Volatility of these Calls was 53.5 when this transaction was executed.  This high IV is indicative of the volatility associated with Match's upcoming October 31st, 2023 quarterly earnings report.

A possible overall performance result (including commissions) for this Match Group Covered Calls position is:
Match Group Covered Calls Net Investment: $16,210.68
= ($42.78 - $2.26) * 400 shares + $2.68 commission

Net Profit:
(a) Options Income: +$1,757.95
= ($2.26 + $.64 + $1.52) * 400 shares - $10.05 commissions
(b) Dividend Income: +$0.00
= ($0.00 dividends per share x 400 shares)
(c) Capital Appreciation (If MTCH shares assigned at $38.00 strike price at expiration): -$1,912.00
+($38.00 - $42.78) * 400 shares

Total Net Profit (If options exercised on the 11/17/2023 options expiration date): -$154.05

= (+$1,757.95 options income +$0.00 dividend income -$1,912.00 capital appreciation)

Potential Absolute Return-on-Investment (If the Match Group Inc. shares are assigned at the $38.00 strike price at the Nov. 17th, 2023 options expiration date): -1.0%

= -$154.05/$16,210.68

Potential Annualized Return-on-Investment (If 400 Match Group shares assigned at $38.00 at the 11/17/2023 options expiration): -5.8%

= (-$154.05/$16,210.68) * (365/60 days)

Monthly Options Expiration Results through October 20th, 2023

Each month after the monthly options expiration date, this summary report provides the results on all positions that have been closed out during the past month (i.e. since the prior month's options expiration date). So this post covers the period from the day after last month's September 15th, 2023 options expiration through yesterday's October 20th, 2023 monthly options expiration date.  

During this past month, the Covered Calls Advisor Portfolio held a total of ten positions.  Five positions were closed out at a profit, three positions were closed out at a loss, and two positions expired out-of-the-money on yesterday's monthly options expiration date (so those shares currently remain in the Covered Calls Advisor Portfolio).   

The specific results for each position are summarized as follows: 

• One Covered Calls position expired in-the-money (stock price above the strike price) on yesterday's October 20th, 2023 monthly options expiration date: Uber Technologies Inc. -- +1.2% absolute return-on-investment in 14 days (equivalent to a +30.1% annualized return-on-investment).  

• Three Covered Calls positions expired in-the-money on their respective Weekly options expiration dates during the past month as follows:

1. The Walt Disney Company -- +1.6% absolute return-on-investment in 15 days (equivalent to a +38.4% annualized return-on-investment).
2. Uber Technologies Inc. -- +0.9% absolute return-on-investment in 11 days (equivalent to a +31.5% annualized return-on-investment).
3. Microsoft Corporation -- +1.3% absolute return-on-investment in 14 days (equivalent to a +33.8% annualized return-on-investment).

• One Covered Call position was closed out by early assignment on the day prior to its ex-dividend date: Oracle Corporation -- +1.0% absolute return-on-investment in 8 days (equivalent to a +47.6% annualized return-on-investment).

• Three Covered Call positions were closed out yesterday by early decision with substantial losses as follows: 

1. Delta Air Lines Inc. -- -17.8% absolute return-on-investment in 88 days (equivalent to a -73.8% annualized return-on-investment).
2. SolarEdge Technologies Inc. -- -30.6% absolute return-on-investment in 59 days (equivalent to a -189.3% annualized return-on-investment).
3. U.S. Bancorp -- -4.7% absolute return-on-investment in 35 days (equivalent to a -48.5% annualized return-on-investment).

• Two Covered Calls positions in Halozyme Therapeutics Inc. and Match Group Inc. closed out-of-the-money yesterday on their October 20th, 2023 monthly options expiration date, so the options expired and the shares now remain in the Covered Calls Advisor Portfolio.  Early next week, a decision will be made to either close out the positions by selling the shares or to continue the Covered Calls positions by selling future Call options against the shares currently held.  As always, the details of all transactions-to-date will be posted on this blog site on the same day the transactions occur.

During the past year (last 12 months) 114 of 126 positions (90.5%) in the Covered Calls Advisor Portfolio (CCAP) were closed out at a profit.  The Covered Calls Advisor Portfolio weighted average annualized-return-on-investment (aroi) was +11.7% during the past year and the average holding period for these 126 closed positions was 18.4 days.  In comparison, the benchmark S&P 500 returned +11.2% during the same prior one-year period.   

This Covered Calls Advisor blog is available to anyone interested in learning about implementing a successful Covered Calls investing strategy.  As always, I also encourage you to email me at partlow@cox.net any time you would like my feedback on your Covered Call position ideas or your questions on anything related to the Covered Calls investing strategy.  

Best Regards,

Jeff Partlow
Covered Calls Advisor
partlow@cox.net

Covered Calls Position Established in Uber Technologies Inc.

Yesterday afternoon, my buy/write net debit limit order was executed and 500 shares of Uber Technologies Inc.(ticker symbol UBER) stock were purchased at $43.02 and 5 November 3rd, 2023 $42.00 Call options were sold at $2.00 per share -- a net debit of $41.02 per share.  So the potential time value profit if the stock is in-the-money and therefore closed out by assignment on the options expiration date is $.98 per share [$2.00 Call options premium - ($43.02 stock purchase price - $42.00 strike price)].    

This is a repeat of eleven similar Uber Covered Calls positions (most of which, like this one, were of about two weeks duration) during the past several months and all were profitably assigned on their respective options expiration dates.  Also like the prior Uber positions, today's new position was established at an in-the-money strike price and with an approximate probability when this position was established that the stock will be in-the-money and therefore assigned on the options expiration date of 62.7%.

As detailed below, a potential outcome for this Uber Technologies investment is +2.4% absolute return-on-investment for the next 14 days (equivalent to +61.9% annualized-return-on-investment) if the stock closes above the $42.00 strike price on the November 3rd, 2023 options expiration date.

Uber Technologies Inc. (UBER) -- New Covered Calls Position

The net debit buy/write limit order was executed as follows:
10/20/2023 Bought 500 shares of Uber Technologies Inc. stock @ $43.02 per share.  
10/20/2023 Sold 5 Uber November 3rd, 2023 $42.00 Call options @ $2.00 per share.
Note: this was a simultaneous Buy/Write transaction and the Implied Volatility of the Calls was 41.7 when this position was established which, as preferred, is well above the current VIX of 21.1.  

A possible overall performance result (including commissions) if this position is assigned on its 11/3/2023 options expiration date is follows:
Covered Calls Net Investment: $20,506.65
= ($43.02 - $2.00) * 500 shares + $3.35 commission

Net Profit Components:
(a) Options Income: +$996.65
= ($2.00 * 500 shares) - $3.35 commission
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If Uber stock is above the $42.00 strike price at the November 3rd, 2023 options expiration date): -$510.00
= ($42.00 - $43.02) * 500 shares

Potential Total Net Profit (If assigned at expiration): +$486.65
= (+$996.65 options income + $0.00 dividend income - $510.00 capital appreciation)

Potential Absolute Return-on-Investment: +2.4%
= +$486.65/$20,506.65
Potential Equivalent Annualized-Return-on-Investment: +61.9%
= (+$486.65/$20,506.65) * (365/14 days)

Established Covered Calls in Morgan Stanley

This morning at 10:20am ET, a Covered Calls position was established in Morgan Stanley (ticker symbol MS) when 300 shares were purchased at $72.43 and 3 November 10th, 2023 Call options were sold at $3.19 per share at the $70.00 strike price.  The net debit limit order at $69.24 was executed, so the time value was $.76 per share [$3.19 Call options premium - ($72.43 stock purchase price - $70.00 strike price)]. There is an upcoming quarterly ex-dividend of $.85 (annual dividend yield of 4.7%) on October 30th., so two potential return-on-investment results for this position, as detailed below, include the possibility of early assignment because the ex-dividend is prior to the November 10th, 2023 options expiration date.  Their Q4 2022 earnings were reported two days ago, so there will be no new earnings report prior to the options expiration date.  Given the Covered Calls Advisor's current Overall Market Meter indicator of Slightly Bearish, an in-the-money Covered Calls position was established with a Delta of 71.4.  For the 25 Wall Street analysts' covering Morgan Stanley, their current average target price is $91.48 which is +26.3% above today's stock purchase price.

Most companies in the Financial Sector provide only modest growth prospects, but they often provide good annual dividend yields (such as the 4.7% annual dividend yield for this Morgan Stanley position).  Consequently, the Covered Calls Advisor targets opportunities to use the Dividend Capture Strategy in all Financial Sector Covered Calls positions.  This new November 10th, 2023 Morgan Stanley Covered Calls position continues the Dividend Capture Strategy of often selling in-the-money monthly Covered Calls for one of six megacap U.S. banks (Bank of America, Citigroup, JPMorgan Chase, Goldman Sachs, Morgan Stanley, and Wells Fargo) for each options expiration month:
(JPMorgan Chase quarterly for Jan, Apr, July, and Oct options expirations;
Citigroup, Morgan Stanley, and/or Wells Fargo for Feb, May, Aug, and Nov options expirations; and
Bank of America and/or Goldman Sachs for Mar, Jun, Sep, and Dec options expirations). 

The goal of these monthly Covered Calls in these banks is to both provide an opportunity to either: (1) potentially capture the quarterly dividend payment and if the stock price remains above the strike price at options expiration, the maximum possible return-on-investment result on the options expiration date for the position would be achieved; or (2) have the stock assigned early on the last trading day prior to the ex-dividend date in which case the Covered Calls Advisor is usually very pleased since the Dividend Capture Strategy criteria are designed such that most often the annualized return-on-investment for early assignment is greater than that would be achieved if the stock was instead assigned on the options expiration date (which is the case for this Morgan Stanley position).  So far, applying this approach has provided attractive annualized return results -- significantly better than would be achieved if Covered Calls positions for these bank stocks were instead held in the Covered Calls Advisor Portfolio in the other two non-dividend paying months each quarter.   

As detailed below, two potential return-on-investment results are: 

•  +1.1% absolute return (equivalent to +49.6% annualized return for the next 8 days) if the stock is assigned early (on the last business day prior to the October 30th, 2023 ex-dividend date); OR 

• +2.3% absolute return (equivalent to +40.2% annualized return over the next 21 days) if the stock is assigned on the November 10th, 2023 options expiration date.

Morgan Stanley (MS) -- New Covered Calls Position
The buy/write transaction was:
10/20/2023 Bought 300 Morgan Stanley shares @ $72.43
10/20/2023 Sold 3 Morgan Stanley 11/10/2023 $70.00 Call options @ $3.19
Note: the Implied Volatility of the Call options was 26.3 when this buy/write transaction was executed.
10/30/2023 Upcoming quarterly ex-dividend of $.85 per share

Two possible overall performance results (including commissions) for this Morgan Stanley Covered Calls position are as follows:
Covered Calls Cost Basis: $20,774.01
= ($72.43 - $3.19) * 300 shares + $2.01 commission

Net Profit Components:
(a) Options Income: +$954.99
= ($3.19 * 300 shares) - $2.01 commission
(b) Dividend Income (If option exercised early on Friday, October 27th, the last business day prior to the Monday, October 30th ex-div date): +$0.00; or
(b) Dividend Income (If Morgan Stanley stock assigned at the November 10th, 2023 expiration): +$255.00         

= ($.85 dividend per share x 300 shares)

(c) Capital Appreciation (If Morgan Stanley Call options assigned early on October 27th): -$729.00
+($70.00 - $72.43) * 300 shares; or
(c) Capital Appreciation (If shares assigned at $70.00 strike price at the Nov. 10th options expiration): -$729.00
+($70.00 - $72.43) * 300 shares

1. Total Net Profit [If option exercised early on the last business day prior to the Jan. 30th ex-dividend date)]: +$225.99

= (+$954.99 options income +$0.00 dividend income -$729.00 capital appreciation); or

2. Total Net Profit (If Morgan Stanley shares assigned at $70.00 strike price at the Nov. 10th, 2023 expiration): +$480.99

= (+$954.99 +$255.00 -$729.00)

1. Absolute Return-on-Investment (If option exercised early on Oct. 27th): +1.1%

= +$225.99/$20,774.01

Annualized Return-on-Investment: +49.6%

= (+$225.99/$20,774.01) * (365/8 days); or

2. Absolute Return-on-Investment (If Morgan Stanley shares assigned at $70.00 at the Nov. 10th, 2023 options expiration): +2.3%

= +$480.99/$20,774.01

Annualized Return-on-Investment (If Morgan Stanley shares assigned at the 11/10/2023 expiration): +40.2%

= (+$480.99/$20,774.01) * (365/21 days)

Either outcome would provide an attractive return-on-investment result for this Morgan Stanley investment.  These returns will be achieved as long as the stock is above the $70.00 strike price at assignment.  If the stock declines below the strike price, the breakeven price of $68.39 ($72.43 -$3.19 -$.85) provides 5.6% downside protection below today's stock purchase price.

At least eight of the nine metrics used in the Covered Calls Advisor's Dividend Capture Strategy spreadsheet must be 'YES' prior to establishing a position.  As shown below with this Morgan Stanley position, all nine criteria were met.

Established Covered Calls Position in CVS Health Corporation

This afternoon I established a short-term Covered Calls net debit limit order in CVS Health Corporation (ticker CVS) for 300 shares of the October 27th, 2023 $70.00s at $69.59 per share. The order was executed this afternoon at 2:55pm ET when the stock price had declined to $70.91 and the 3 Calls were sold for $1.32 per share. The $69.59 net debit had a $.41 per share time value when this order was transacted.  The Delta was 67.0 when this Covered Calls position was established, which approximates the probability of 67.0% that the Call options will be in-the-money on the options expiration date. 

CVS goes ex-dividend tomorrow at $.605 per share (3.4% annualized dividend yield) and an owner of these Calls is unlikely to exercise their option today given the substantial time value that existed this afternoon when this Covered Calls position was established.  As preferred, CVS' next quarterly earnings report on November 1st, 2023 is after the October 27th options expiration date.
  
CVS is rated, on average, as Outperform by the 25 Wall Street analysts that cover it and their average target price is $90.16 (+27.1% above today's purchase price).  CVS' valuation is attractive with its current fiscal year estimated P/E Ratio is only 8.3.   

As detailed below, a potential return-on-investment result is +1.4% absolute return-on-investment (equivalent to +58.8% annualized return-on-investment over the next 9 days) if the stock is assigned on the October 28th, 2023 options expiration date.

CVS Health Corp. (CVS) -- New Covered Calls Position

The buy/write transaction was:
10/18/2023 Bought 300 CVS shares @ $70.91
10/18/2023 Sold 3 CVS 10/28/2023 $70.00 Call options @ $1.32
10/19/2023 Upcoming quarterly ex-dividend of $.605 per share

A possible overall performance result (including commissions) for this CVS Health Covered Calls position is as follows:
CVS Covered Calls Net Investment: $20,879.01
= ($70.91 - $1.32) * 300 shares + $2.01 commission

Net Profit Components:
(a) Options Income: +$393.99
= ($1.32 * 300 shares) - $2.01 commission
(b) Dividend Income (If CVS stock assigned at the Oct. 28th, 2023 options expiration date): +$181.50
= ($.605 dividend per share x 300 shares)

(c) Capital Appreciation (If shares assigned at $70.00 strike price at the 10/28/2023 options expiration): -$273.00
= +($70.00 - $70.91) * 300 shares

Potential Total Net Profit (If CVS shares assigned at $70.00 at the Oct. 28th, 2023 options expiration date): +$302.49

= (+$393.99 options income +$181.50 dividend income -$273.00 capital appreciation)

Potential Absolute Return-on-Investment: +1.4%

= +$302.49/$20,879.01

Potential Annualized Return-on-Investment: +58.8%

= (+$302.49/$20,879.01) * (365/9 days)

Continuation of Covered Calls Positions in iShares China Large-Cap ETF

Last Friday, the October 13th, 2023 Covered Calls positions in iShares China Large-Cap ETF (ticker FXI) closed out-of-the-money.  So the 10 Call options expired and the 1,000 shares remained in the Covered Calls Advisor Portfolio.  This morning, I decided to continue this Covered Calls positions by selling 10 Call options to rollout to the November 3rd, 2023 options expiration date.  The transactions-to-date for this position as well as potential return-on-investment results if the position is assigned on its November 3rd, 2023 options expiration date is detailed below.

iShares China Large-Cap ETF (FXI) -- Continuation of Covered Calls Position

The original Buy/Write transaction was as follows:
9/1/2023 Bought 1,000 shares of iShares China Large-Cap ETF @ $27.99 per share.  
9/1/2023 Sold 10 FXI Sept. 15th, 2023 $28.00 Call options @ $.63 per share.
9/15/2023 Ten FXI Call options closed out-of-the-money, so these options expired and 1,000 shares remain in the Covered Calls Advisor Portfolio.
9/22/2023 Continued this iShares China Large-Cap ETF Covered Calls position by selling 10 FXI October 13th, 2023 Call options at the $27.50 strike price for $.60 per share.  The iShares China Large-Cap ETF share price was $27.21 when these Calls were sold and their Implied Volatility was 27.7.

10/13/2023 Ten FXI Call options closed out-of-the-money, so these options expired and 1,000 shares remain in the Covered Calls Advisor Portfolio.
10/16/2023 Continued this iShares China Large-Cap ETF Covered Calls position by selling 10 FXI November 3rd, 2023 Call options at the $27.00 strike price for $.49 per share.  The iShares China Large-Cap ETF share price was $26.49 when these Calls were sold and their Implied Volatility was 29.4.

A possible overall performance result (including commissions) for this iShares China Large-Cap ETF Covered Calls position if assigned on the 11/3/2023 options expiration date is as follows:
FXI Covered Calls Net Investment: $27,366.70
= ($27.99 - $.63) * 1,000 shares + $6.70 commission

Net Profit:
(a) Options Income: +$1,699.90
= ($.63 + $.60 + $.49) * 1,000 shares - $20.10 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If 1,000 iShares China Large-Cap ETF shares assigned at the $27.00 strike price at the 11/3/2023 expiration): -$990.00
+($27.00 - $27.99) * 1,000 shares

Total Net Profit Potential (If 1,000 iShares China Large-Cap ETF shares assigned at the $27.00 strike price at the options expiration date): +$709.90
= (+$1,699.90 options income +$0.00 dividend income -$990.00 capital appreciation)

Potential Absolute Return-on-Investment: +2.6%
= +$709.90/$27,366.70
Potential Annualized Return-on-Investment: +15.0%
= (+$709.90/$27,366.70) * (365/63 days)

Established Covered Calls in Lowe's Companies Inc. Using Dividend Capture Strategy

Today, a buy/write limit order in Lowe's Companies Inc. (ticker LOW) was executed at the Covered Calls Advisors' net debit price of $187.74 per share.  Two hundred shares were purchased at $195.79 and two November 3rd, 2023 Call options were sold for $8.05 at the $190.00 strike price, therefore a time value of $2.26 per share = [$8.05 options premium - ($195.79 stock price - $190.00 strike price)].  

This position uses the Covered Calls Advisor's Dividend Capture Strategy since Lowe's has an upcoming quarterly ex-dividend of $1.10 per share on October 24th) which is prior to the November 3rd options expiration date.  This is equivalent to an absolute annual dividend yield of 2.2% and an equivalent annualized dividend yield of 9.8% = [($1.10/$195.79) x (365/21 days to expiration)].  This dividend is included in the detailed return-on-investment calculations below.  Either an early assignment on the day prior to the ex-dividend date or on the November 3rd expiration date would be desirable to the Covered Calls Advisor given the potential annualized return on investments for either outcome.  Importantly to the Covered Calls Advisor, there is no quarterly earnings report prior to the options expiration date since the next earnings report on November 21st after the November 3rd options expiration date.

As shown on the table at the bottom of this post, all nine criteria of the Dividend Capture Strategy are met with this position.  Even if Lowe's stock market declines somewhat during the next 21 days until the options expiration date, if the stock closes above the $190.00 strike price, then a very satisfactory annualized-return-on-investment of +31.0% will be achieved.  The Delta for these Call options was 68.8 when this position was established which approximates the probability that the position will be in-the-money at market close on the options expiration date.  

As detailed below, two potential return-on-investment results are: 

•  +1.2% absolute return (equivalent to +39.8% annualized return for the next 11 days) if the stock is assigned early (business day prior to the October 24th ex-dividend date). 
  

• +1.8% absolute return (equivalent to +31.0% annualized return over the next 21 days) if the stock is assigned on the November 3rd, 2023 options expiration date.

Lowe's Companies Inc. (LOW) -- New Covered Calls Position
The buy/write transaction was:
10/13/2023 Bought 200 Lowe's Companies Inc. shares @ $195.79
10/13/2023 Sold 2 Lowe's 11/3/2023 $190.00 Call options @ $8.05
Note: Implied Volatility (IV) of the Call options was at 24.7 when this position was transacted which, as preferred, is above the current VIX of 19.2.   
10/24/2023 Upcoming quarterly ex-dividend of $1.10 per share

Two possible overall performance results (including commissions) for this Lowe's Companies Inc. Covered Calls position are as follows:
Covered Calls Cost Basis: $37,549.34
= ($195.79 - $8.05) * 200 shares + $1.34 commission

Net Profit Components:
(a) Options Income: +$1,608.66
= ($8.05 * 200 shares) - $1.34 commission
(b) Dividend Income (If option exercised early on Oct. 23rd, 2023, the business day prior to the October 24th ex-div date): +$0.00; or
(b) Dividend Income (If Lowe's stock assigned at the November 3rd, 2023 options expiration): +$220.00
= ($1.10 dividend per share x 200 shares)

(c) Capital Appreciation (If Lowe's Call options assigned early on October 24th): -$1,158.00
+($190.00 - $195.79) * 200 shares; or
(c) Capital Appreciation (If shares assigned at $190.00 strike price at options expiration): -$1,158.00
+($190.00 - $195.79) * 200 shares

1. Total Net Profit [If option exercised early (business day prior to the Oct. 24th ex-dividend date)]: +$450.66

= (+$1,608.66 options income +$0.00 dividend income -$1,158.00 capital appreciation); or

2. Total Net Profit (If Lowe's shares assigned at $190.00 at the November 3rd, 2023 expiration): +$670.66

= (+$1,608.66 +$220.00 -$1,158.00)

1. Potential Absolute Return [If option exercised on business day prior to ex-dividend date]: +1.2%

= +$450.66/$37,549.34

Potential Annualized Return (If option exercised early): +39.8%

= (+$450.66/$37,549.34) * (365/11 days); or

2. Potential Absolute Return (If Lowe's shares assigned on November 3rd options expiration date): +1.8%

= +$670.66/$37,549.34

Potential Annualized Return (If Lowe's shares assigned at $190.00 at the Nov. 3rd, 2023 expiration): +31.0%

= (+$670.66/$37,549.34) * (365/21 days)

Either outcome provides an attractive return-on-investment result for this Lowe's Companies Inc. investment.  These returns will be achieved as long as the stock is above the $190.00 strike price at assignment.  However, if the stock declines below the strike price, the breakeven price of $186.64 ($195.79 -$8.05 -$1.10) provides 4.7% downside protection below today's stock purchase price.

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 Lowe's Companies Inc. Covered Calls position.

Early Assignment of Covered Calls Position in Oracle Corporation

Early this morning I was notified by my broker's email that the two Oracle Corporation (ticker ORCL) October 20th, 2023 $102.00 Call options were exercised yesterday.  Oracle stock has increased from its purchase price of $105.50 on Tuesday last week when this Covered Calls position was established to $109.31 at the market close yesterday.  I am pleased for this early assignment despite losing the opportunity to capture today's $.40 ex-dividend since the +47.6% annualized-return-on-investment (aroi) achieved by early assignment is greater than the +30.9% aroi that would instead have been achieved if this position was instead assigned on its October 20th options expiration date.   

The post when this Oracle Corp. Covered Calls position was originally established is here.  As detailed below, the return-on-investment result for this Oracle Corporation Covered Calls position was +1.0% absolute return in 8 days (equivalent to a +47.6% annualized return-on-investment).  

Oracle Corporation (ORCL) -- Covered Calls Position Closed by Early Assignment

The buy/write transaction was:
10/3/2023 Bought 200 Oracle Corporation shares @ $105.50
10/3/2023 Sold 2 ORCL 10/20/2023 $102.00 Call options @ $4.56 per share
Note: the Implied Volatility of the Call options was 26.2 when this buy/write transaction was executed.
10/11/2023 Oracle Call options owner exercised their two Call options, so the Covered Calls position was closed out early. The two ORCL Call options expired worthless and the 200 Oracle Corp. shares were sold at the $102.00 strike price.

The overall performance results (including commissions) for this Covered Calls position are as follows:
Oracle Covered Calls Net Investment: $20,189.34
= ($105.50 - $4.56) * 200 shares + $1.34 commission

Net Profit Components:
(a) Options Income: +$910.66
= ($4.56 * 200 shares) - $1.34 commission
(b) Dividend Income (Calls exercised early on the last business day prior to the October 11th ex-div date): +$0.00
(c) Capital Appreciation (ORCL Call options assigned early on October 11th): -$700.00
+($102.00 strike price - $105.50 stock price) * 200 shares

Total Net Profit [Early exercise on the last business day prior to the Oct. 11th ex-dividend date)]: +$210.66

= (+$910.66 options income +$0.00 dividend income -$700.00 capital appreciation)

Absolute Return-on-Investment: +1.0%

= +$210.66/$20,189.34

Annualized Return-on-Investment: +47.6%

= (+$210.66/$20,189.34) * (365/8 days)

Continuation of Covered Calls Position in Delta Air Lines Inc.

Last Friday, the October 6th, 2023 $41.00 Covered Calls position in Delta Air Lines Inc. (ticker DAL) closed out-of-the-money, so the Calls expired and 500 DAL shares remained in the Covered Calls Advisor Portfolio.  The price of all airlines (including Delta) have declined sharply as the price of jet fuel has increased along with the spike in crude oil.  Despite Delta's next quarterly earnings report being later this week, I decided to continue this Covered Calls position by rolling down and out to the October 20th, 2023 $37.50 strike price at $.68 per share this morning when Delta's stock price was $36.38.  

As detailed below, a potential return-on-investment result is -11.8% absolute return-on-investment (equivalent to -49.0% annualized return-on-investment for the 88 days holding period) if the stock price is in-the-money (i.e. above the current $37.50 strike price) and therefore assigned on the October 20th, 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.

8/18/2023 Five DAL Calls expired out-of-the-money so the 500 shares remained in the Covered Calls Advisor Portfolio.
8/21/2023 Continued this Delta Air Lines Inc. Covered Calls position by selling 5 Delta September 1st, 2023 Call options at the $43.00 strike price for $.49 per share.  The Delta share price was $41.80 when these Calls were sold.

9/1/2023 Five DAL 9/1/2023 $43.00 Calls expired out-of-the-money so the 500 shares remained in the Covered Calls Advisor Portfolio.

9/5/2023 Continued this Delta Air Lines Inc. Covered Calls position by selling 5 Delta September 15th, 2023 Call options at the $41.00 strike price for $.46 per share.  

9/15/2023 Five DAL 9/15/2023 $41.00 Calls expired out-of-the-money so the 500 shares remained in the Covered Calls Advisor Portfolio.

9/15/2023 Continued this Delta Air Lines Inc. Covered Calls position by selling 5 Delta October 6th, 2023 Call options at the $41.00 strike price for $.53 per share.  

10/6/2023 Five DAL 10/6/2023 $41.00 Calls expired out-of-the-money so the 500 shares remained in the Covered Calls Advisor Portfolio.

10/10/2023 Continued this Delta Air Lines Inc. Covered Calls position by selling 5 Delta October 20th, 2023 Call options at the $37.50 strike price for $.68 per share.  The stock price was $36.38 when these Call options were sold. 

A possible overall performance result (including commissions) for this Delta Air Lines Inc. Covered Calls position if the stock is in-the-money at its options expiration date 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: +$2,304.90
= ($1.93 + $.56 + $.49 + $.46 + $.53 + $.68) * 500 shares - $20.10 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If 500 Delta Air Lines shares assigned at $37.50 strike price at the 10/20/2023 options expiration date): -$4,995.00
+($37.50 - $47.49) * 500 shares

Potential Total Net Profit (If 500 Delta Air Lines shares assigned at the $37.50 strike price upon options expiration): -$2,690.10
= (+$2,304.90 options income +$0.00 dividend income -$4,995.00 capital appreciation)

Absolute Return-on-Investment Potential: -11.8%
= -$2,690.10/$22,783.35
Annualized Return-on-Investment Potential: -49.0%
= (-$2,690.10/$22,783.35) * (365/88 days)

Continuation of Covered Calls Positions in Match Group Inc. and U.S. Bancorp

The Covered Calls positions in Match Group Inc. (ticker MTCH) and U.S. Bancorp (ticker USB) closed out-of-the-money, so the Calls expired and shares remained in the Covered Calls Advisor Portfolio.  This morning, I decided to continue both of these Covered Calls positions by selling Call options to roll out to the October 20th, 2023 options expiration dates. Both positions are currently held at a loss and these rollout transactions are an attempt to repair them back toward breakeven. The transactions-to-date for these positions as well as the potential return-on-investment results if these positions are assigned on their 10/20/2023 expiration date are as follows:

1. Match Group Inc. (MTCH) -- Continuation of Covered Calls Position

The buy/write transaction was:
9/18/2023 Bought 400 Match Group Inc. shares @ $42.78
9/18/2023 Sold 4 MTCH 9/29/2023 $41.00 Call options @ $2.26 per share.
9/29/2023 400 Match Group shares closed out-of-the-money so 4 Calls expired and 400 MTCH shares remain in the Covered Calls Advisor Portfolio.

10/9/2023 Continued Covered Calls position by selling 4 Match Group 10/20/2023 Call options at the $38.50 strike price for $.64 per share when the stock price was $37.20.

A possible overall performance result (including commissions) for this Match Group Covered Calls position is:
Match Group Covered Calls Net Investment: $16,210.68
= ($42.78 - $2.26) * 400 shares + $2.68 commission

Net Profit:
(a) Options Income: +$1,153.30
= ($2.26 + $.64) * 400 shares - $6.70 commissions
(b) Dividend Income: +$0.00
= ($0.00 dividends per share x 400 shares)
(c) Capital Appreciation (If MTCH shares assigned at $38.50 strike price at expiration): -$1,712.00
+($38.50 - $42.78) * 400 shares

Total Net Profit (If options exercised on the 10/20/2023 options expiration date): -$558.70

= (+$1,153.30 options income +$0.00 dividend income -$1,712.00 capital appreciation)

Potential Absolute Return-on-Investment (If the Match Group Inc. shares are assigned at the $38.50 strike price at the Oct. 20th, 2023 options expiration date): -3.4%

= -$558.70/$16,210.68

Potential Annualized Return-on-Investment (If 400 Match Group shares assigned at $38.50 at the 10/20/2023 options expiration): -39.3%

= (-$558.70/$16,210.68) * (365/32 days)

2. U.S. Bancorp (USB) -- Continuation of Covered Calls Position

The buy/write transaction was:
9/15/2023 Bought 500 U.S. Bancorp shares @ $35.23
9/15/2023 Sold 5 USB 10/6/2023 $34.00 Call options @ $1.65 per share.
9/28/2023 Ex-dividend of $.48 per share.

10/6/2023 500 U.S. Bancorp shares closed out-of-the-money so 5 USB Calls expired and 500 shares remain in the Covered Calls Advisor Portfolio.

10/9/2023 Continuation of Covered Calls position by selling 5 USB 10/20/2023 Call options at the $33.00 strike price for $.65 per share when the stock price was $31.97.

A possible overall performance result (including commissions) for this U.S. Bancorp Covered Calls position is:

U.S. Bancorp Covered Calls Net Investment: $16,793.35
= ($35.23 - $1.65) * 500 shares + $3.35 commission

Net Profit:
(a) Options Income: +$1,143.30
= ($1.65 + $.65) * 500 shares - $6.70 commissions
(b) Dividend Income: +$240.00
= ($0.48 dividends per share x 500 shares)
(c) Capital Appreciation (If USB shares assigned at $33.00 strike price at expiration): -$1,115.00
+($33.00 - $35.23) * 500 shares

Total Net Profit (If options exercised on the 10/20/2023 options expiration date): +$268.30

= (+$1,143.30 options income +$240.00 dividend income -$1,115.00 capital appreciation)

Potential Absolute Return-on-Investment (If the U.S. Bancorp shares are assigned at the $33.00 strike price at the Oct. 20th, 2023 options expiration date): +1.6%

= +$268.30/$16,793.35

Potential Annualized Return-on-Investment (If 500 USB shares assigned at $33.00 at the 10/20/2023 options expiration): +16.7%

= (+$268.30/$16,793.35) * (365/35 days)

Jeff Partlow (The Covered Calls Advisor)

partlow@cox.net

 

October 6th, 2023 Options Expiration Results

The Covered Calls Advisor Portfolio had three Covered Calls positions with October 6th, 2023 options expirations.  The position containing 100 shares in Microsoft Corporation $310.00 strike price position closed in-the-money at $327.26 on yesterday's options expiration date, so the one Call expired and the 100 shares were called away (i.e. sold) at the $310.00 strike price.  

The positions in Delta Air Lines Inc. and US Bancorp closed out-of-the-money yesterday, so the Calls expired and the shares remain in the Covered Calls Advisor Portfolio.  Both positions are currently held as unrealized losses and early next week a decision will be made to either close out the positions by selling the shares or continuing with them as Covered Calls positions by selling future Calls against the 500 shares of stock currently owned in both positions. A summary of the results for these three positions are as follows:

1. Microsoft Corporation -- +1.3% absolute return (equivalent to +33.8% annualized return-on-investment) for the 14 days of this investment.  The original post detailing this Covered Calls position is here. 

2. Delta Air Lines Inc. -- Delta Air Lines Inc. closed out-of-the-money yesterday at $37.00 which was below its $41.00 strike price, so the five 10/6//20233 Call options expired and 500 Delta shares now remain in the Covered Calls Advisor Portfolio. 

3. U.S. Bancorp -- U.S. Bancorp's price closed out-of-the-money yesterday at $31.86 which was below its $34.00 strike price, so the five 10/6/20233 Call options expired and 500 USB shares now remain in the Covered Calls Advisor Portfolio.  

Jeff Partlow

The Covered Calls Advisor
partlow@cox.net

Covered Calls Position Established in Uber Technologies Inc.

Yesterday afternoon, my buy/write net debit limit order was executed and 500 shares of Uber Technologies Inc.(ticker symbol UBER) stock were purchased at $43.02 and 5 November 3rd, 2023 $42.00 Call options were sold at $2.00 per share -- a net debit of $41.02 per share.  So the potential time value profit if the stock is in-the-money and therefore closed out by assignment on the options expiration date is $.98 per share [$2.00 Call options premium - ($43.02 stock purchase price - $42.00 strike price)].    

This is a repeat of eleven similar Uber Covered Calls positions (most of which, like this one, were of about two weeks duration) during the past several months and all were profitably assigned on their respective options expiration dates.  Also like the prior Uber positions, today's new position was established at an in-the-money strike price and with an approximate probability when this position was established that the stock will be in-the-money and therefore assigned on the options expiration date of 62.7%.

As detailed below, a potential outcome for this Uber Technologies investment is +2.4% absolute return-on-investment for the next 14 days (equivalent to +61.9% annualized-return-on-investment) if the stock closes above the $42.00 strike price on the November 3rd, 2023 options expiration date.

Uber Technologies Inc. (UBER) -- New Covered Calls Position

The net debit buy/write limit order was executed as follows:
10/20/2023 Bought 500 shares of Uber Technologies Inc. stock @ $43.02 per share.  
10/20/2023 Sold 5 Uber November 3rd, 2023 $42.00 Call options @ $2.00 per share.
Note: this was a simultaneous Buy/Write transaction and the Implied Volatility of the Calls was 41.7 when this position was established which, as preferred, is well above the current VIX of 21.1.  

A possible overall performance result (including commissions) if this position is assigned on its 11/3/2023 options expiration date is follows:
Covered Calls Net Investment: $20,506.65
= ($43.02 - $2.00) * 500 shares + $3.35 commission

Net Profit Components:
(a) Options Income: +$996.65
= ($2.00 * 500 shares) - $3.35 commission
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If Uber stock is above the $42.00 strike price at the November 3rd, 2023 options expiration date): -$510.00
= ($42.00 - $43.02) * 500 shares

Potential Total Net Profit (If assigned at expiration): +$486.65
= (+$996.65 options income + $0.00 dividend income - $510.00 capital appreciation)

Potential Absolute Return-on-Investment: +2.4%
= +$486.65/$20,506.65
Potential Equivalent Annualized-Return-on-Investment: +61.9%
= (+$486.65/$20,506.65) * (365/14 days)

Covered Calls Position Established in Oracle Corporation

Early in this morning's trading session, a Covered Calls position was established in Oracle Corporation (ticker ORCL) when my buy/write limit order was executed.  My Dividend Capture Strategy (see details here) was used for this position.   

Two hundred shares were purchased at $105.50 and 2 October 20th, 2023 Call options were sold at $4.56 per share at the $102.00 strike price.  This buy/write transaction occurred at a Delta of 72.5 which approximates the probability that the Call options will be in-the-money and therefore assigned on the options expiration date.     

The potential time value profit for this Oracle Covered Calls position is $1.06 per share [$4.56 Call options premium - ($105.50 stock purchase price - $102.00 strike price)].  In addition to this $.1.06 profit potential, there is an upcoming quarterly ex-dividend income potential per share of $.40 (annual dividend yield of 1.5%) on October 11th, 2023.  So, the two potential return-on-investment results detailed below are: (1) the possibility of early assignment since the October 11th ex-dividend is prior to the October 20th, 2023 options expiration date; and (2) the possibility that this Covered Calls position is in-the-money (and therefore assigned) on the options expiration date.  The $.40 dividend is a 25.0% increase above the prior year's dividend level.

As shown in the detailed chart below, Oracle meets all 13 filters of my StockRover Overall stock screener and the average Target Price of the analysts that cover Oracle is $129.24 which is +22.5% above today's $105.50 stock purchase price. 

Two potential return-on-investment results are: 

•  +1.0% absolute return (equivalent to +47.6% annualized return for the next 8 days) if the stock is assigned early (on the last business day prior to the October 11th, 2023 ex-dividend date); OR 

• +1.4% absolute return (equivalent to +30.9% annualized return over the next 17 days) if the stock is assigned on the October 20th options expiration date.

These potential returns are very attractive given this is a large-cap company with relatively stable financial performance trends and a Beta (3-year) of .88.  Details of this Oracle Corp. Covered Calls position and two potential return-on-investment results are as follows:

Oracle Corporation (ORCL) -- New Covered Calls Position

The buy/write transaction was:
10/3/2023 Bought 200 Oracle Corporation shares @ $105.50
10/3/2023 Sold 2 ORCL 10/20/2023 $102.00 Call options @ $4.56 per share
Note: the Implied Volatility of the Call options was 26.2 when this buy/write transaction was executed.
10/11/2023 Upcoming quarterly ex-dividend of $.40 per share

Two possible overall performance results (including commissions) for this Covered Calls position are as follows:
Covered Calls Net Investment: $20,189.34
= ($105.50 - $4.56) * 200 shares + $1.34 commission

Net Profit Components:
(a) Options Income: +$910.66
= ($4.56 * 200 shares) - $1.34 commission
(b) Dividend Income (If option exercised early on October 10th, the last business day prior to the October 11th ex-div date): +$0.00; or
(b) Dividend Income (If ORCL stock assigned at the October 20th, 2023 expiration): $80.00
= ($.40 dividend per share x 200 shares)
(c) Capital Appreciation (If ORCL Call options assigned early on October 11th): -$700.00
+($102.00 strike price - $105.50 stock price) * 200 shares; or
(c) Capital Appreciation (If shares assigned at $102.00 strike price at the 10/20/2023 options expiration date): -$700.00
+($102.00 - $105.50) * 200 shares

1. Total Net Profit [If option exercised early on the last business day prior to the Oct. 11th ex-dividend date)]: +$210.66

= (+$910.66 options income +$0.00 dividend income -$700.00 capital appreciation); or

2. Total Net Profit (If stock shares assigned at $102.00 strike price at the 10/20/2023 expiration): +$290.66

= (+$910.66 options income +$80.00 dividend income -$700.00 capital appreciation)

1. Absolute Return-on-Investment (If option exercised early on Oct. 11th): +1.0%

= +$210.66/$20,189.34

Potential Annualized Return-on-Investment: +47.6%

= (+$210.66/$20,189.34) * (365/8 days); or

2. Absolute Return-on-Investment (If ORCL shares assigned at $102.00 at the 10/20/2023 options expiration date): +1.4%

= +$290.66/$20,189.34

Potential Annualized Return-on-Investment (If shares assigned at the 10/20/2023 options expiration date): +30.9%

= (+$290.66/$20,189.34) * (365/17 days)

At least eight of the nine metrics used in the Covered Calls Advisor's Dividend Capture Strategy spreadsheet must be 'YES' prior to establishing a position.  As shown below with this Oracle Corp. position, all nine criteria were met.