Today Covered Calls positions were established in Halozyme Therapeutics Inc. (ticker HALO) and Willscot Mobile Mini Holdings Corp. (WSC) when my buy/write net debit limit orders were executed. For Halozyme, 400 shares were purchased at $36.32 and four January 19th, 2024 Call options were sold at $2.16 per share at the $35.00 strike price. For Willscot Mobile Mini, 400 shares were purchased at $43.26 and four January 19th, 2024 Call options were sold at $1.46 per share at the $42.50 strike price. In-the-money strike prices were established for both positions. The probability that the stocks will be called away (i.e. assigned) at their January 19th options expiration date for Halozyme is 66.1% and for Willscot Mobile Mini is 62.6%. Both companies are mid-caps in size and both are short-term oversold (based on the RSI(2) indicator). Neither company pays a dividend and they do not report quarterly earnings prior to their Jan. 19th options expiration date.
Halozyme Therapeutics is a biotechnology company that has a range of auto-injector devices for subcutaneous and intramuscular delivery to patients. They have license agreements in partnership with several drug companies with 6 currently approved products and 15 more in development. When co-formulated with drugs, their products have the potential to reduce the treatment burden for patients (minutes for subcutaneous injections versus hours for IV infusions). I first researched this company in August 2023 when it appeared as the top-ranked Healthcare sector company in my Growth at a Reasonable Price (GARP) stock screener. I am very impressed by the leadership quality of CEO Helen Torley. Also, the eleven analysts that cover Halozyme have a current average target price is $50.30 which is +38.5% above today's purchase price.
Willscot Mobile Mini Holdings Corp. is in the Rental and Leasing Services industry within the Industrial sector and is the #1 market share leader in the North American modular space and portable storage market. Willscot Mobile Mini matched all twelve filters in my Basic Filters stock screener:
In addition, the current average Target Price of Wall Street analysts covering WillScot Mobile Mini is $53.78 (+23.2% above today's purchase price).
The transactions and potential results for both positions are included in the details presented below:
1. Halozyme Therapeutics Inc. (HALO) -- New Covered Calls PositionThe net debit buy/write limit order was executed as follows:
1/3/2024 Bought 400 shares of Halozyme Therapeutics stock @ $36.32 per share.
1/3/2024 Sold 4 HALO January 19th, 2024 $35.00 Call options @ $2.16 per share.
Note: the Implied Volatility of the Calls was 43.5 when this position was established.
A possible overall performance result (including commissions) if this position is assigned on its 1/19/2024 options expiration date is follows:
Halozyme Covered Calls Net Investment: $13,666.68
= ($36.32 - $2.16) * 400 shares + $2.68 commission
Net Profit Components:
(a) Options Income: +$861.32
= ($2.16 * 400 shares) - $2.68 commission
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If Halozyme stock is above the $35.00 strike price at the January 19th options expiration date): -$528.00
= ($35.00 - $36.32) * 400 shares
Potential Total Net Profit (If assigned at expiration): +$333.32
= (+$861.32 options income + $0.00 dividend income - $528.00 capital appreciation)
Potential Absolute Return-on-Investment: +2.4%
= +$333.32/$13,666.68
Potential Equivalent Annualized-Return-on-Investment: +55.6%
= (+$333.32/$13,666.68) * (365/16 days)
2. Willscot Mobile Mini Holdings Corporation (WSC) -- New Covered Calls Position
The buy/write transaction was:
1/3/2024 Bought 400 Willscot Mobile Mini Holdings Corporation shares @ $43.26
1/3/2024 Sold 4 WSC 1/19/2024 $42.50 Call options @ $1.46 per share
.A possible overall performance result (including commissions) for this Willscot Mobile Mini Covered Calls position is as follows:
Willscot Mobile Mini Covered Calls Net Investment: $16,722.68
= ($43.26 - $1.46) * 400 shares + $2.68 commission
Net Profit:
(a) Options Income: +$581.32
= ($1.46 * 400 shares) - $2.68 commission
(b) Dividend Income: +$0.00
= ($0.00 dividends per share x 400 shares)
(c) Capital Appreciation (If WSC shares assigned at $42.50 strike price at expiration): -$304.00
+($42.50 - $43.26) * 400 shares
Total Net Profit (If options exercised on the 1/19/2024 options expiration date): +$277.32
= (+$581.32 options income +$0.00 dividend income -$304.00 capital appreciation)
Potential Absolute Return-on-Investment (If the Willscot Mobile Mini shares are assigned at the $42.50 strike price at the Jan. 19th, 2024 options expiration date): +1.7%
= +$277.32/$16,722.68
Potential Annualized Return-on-Investment (If 400 Willscot Mobile Mini shares assigned at $42.50 at the 1/19/2024 options expiration date): +37.8%
= (+$277.32/$16,722.68) * (365/16 days)
