Established Covered Call Position in Microsoft Corporation

During the final hour of trading today a Covered Call positions was established in Microsoft Corporation (ticker MSFT).  A short-term Microsoft Corporation position was established at the December 29th, 2023 options expiration date and at the $372.50 strike price.  This Covered Calls position was slightly out-of-the-money since 100 MSFT shares were purchased at $371.128 and one 12/29/2023 $372.50 Call option was simultaneously sold at $4.18 per share (a net debit of $366.948 per share).  This strike price is consistent with the guideline of selling Calls between 3.0% below and 2.0% above the strike price when my Overall Market Meter is "Neutral" (as it is now).  

The potential time value profit for this Microsoft position is $5.552 per share if the stock is above the $372.50 strike price on the December 29th options expiration date and is therefore assigned (i.e. sold) at the $372.50 strike price.  The potential return-on-investment results detailed below shows two potential outcomes on the options expiration date: (1) if the stock price is unchanged at $371.128; and (2) if the stock price increases and is in-the-money and is therefore assigned on the Dec. 29th options expiration date. 

Microsoft Corporation (MSFT) -- New Covered Call Position

The net debit buy/write limit order was executed as follows:
12/20/2023 Bought 100 shares of Microsoft stock @ $371.128 per share.  
12/20/2023 Sold 1 MSFT December 29th, 2023 $372.50 Call option @ $4.18 per share.

Two possible overall performance results (including commissions) are as follows:
Covered Calls Net Investment: $36,695.47
= ($371.128 - $4.18) * 100 shares + $.67 commission

Net Profit Components:
(a) Options Income: +$417.33
= ($4.18 * 100 shares) - $.67 commission
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If Microsoft stock price is unchanged at $371.128 at the December 29th option expiration date): +0.00
= ($371.128 stock price at options expiration - $371.128 stock purchase price) * 100 shares; or
(c) Capital Appreciation: (If MSFT stock price is above the $372.50 strike price at the 12/29/2023 options expiration date): $137.20
= ($372.50 selling price at expiration - $371.128 original stock purchase price) x 100 shares

1. Potential Total Net Profit (If stock price unchanged at expiration): +$417.33
= (+$417.33 option income + $0.00 dividend income + $0.00 capital appreciation); or
2. Potential Total Net Profit (If stock price is in-the-money at the options expiration date and therefore sold at the $372.50 strike price): +$554.53
= (+$417.33 option income + $0.00 dividend income + $137.20 capital appreciation)

1. Potential Absolute Return-on-Investment (If stock price unchanged at $371.128 at expiration): +1.1%
= +$417.33/$36,695.47
Potential Equivalent Annualized-Return-on-Investment (If stock price unchanged): +46.1%
= (+$417.33/$36,695.47) * (365/9 days); or
2. Potential Absolute Return-on-Investment (If stock price is in-the-money at the options expiration date and therefore sold at the $372.50 strike price): +1.5%
= +$554.53/$36,695.47
Potential Equivalent Annualized-Return-on-Investment (If stock price is in-the-money at the options expiration date and therefore sold at the $372.50 strike price): +61.3%
= (+$554.53/$36,695.47) * (365/9 days)