This afternoon, my buy/write limit order in Mondelez International Inc. (ticker MDLZ) was executed. My net debit limit price of $70.60 was executed when three hundred shares were purchased at $72.25 and three April 5th, 2024 Call options were sold at $1.65 per share at the $71.00 strike price. The potential time value profit was $.40 per share = [$71.00 strike price - ($72.25 stock purchase price - $1.65 Call options price)]. An in-the-money Covered Calls position was established with a Delta of 75.0 which approximates a 75.0% probability this position will be in-the-money and therefore assigned on the April 5th, 2024 options expiration date. As desired, the next quarterly earnings report on April 25th is after the Apr 5th options expiration date.
Mondelez has an upcoming ex-dividend of $.425 per share (2.4% dividend yield at the current stock price) on March 27th which is prior to the April 5th options expiration date, so this dividend is included in the potential return-on-investment results shown below. As shown on the chart at the bottom of this post, all seven of the nine criteria in the Covered Calls Advisor's Dividend Capture Strategy spreadsheet were met for this position.
As shown in the detailed chart below, Mondelez meets all 14 filters of my StockRover Overall stock screener. There were 40 companies that met all 14 filters, but Mondelez was one of only two companies in the Consumer Staples sector that met all 14 filters. There are 26 Wall Street analysts that follow Mondelez. Their average price target is $83.96 which is +16.1% above today's stock purchase price. Twenty-five analysts rate them as either a Strong Buy or Buy, one rates it as a Hold, and zero analysts rate it as a Sell or Strong Sell. The one-year Beta is 0.41.
Two potential return-on-investment results are: (a) +0.6% absolute return-on-investment (equivalent to +25.4% annualized
return-on-investment for the next 8 days) if the stock is assigned early (on the last trading day prior to the March 27th, 2024 ex-dividend date); OR (b) +1.2%
absolute return-on-investment (equivalent to +24.9% annualized return-on-investment over the next 17 days) if the stock is assigned on the April 5th, 2024 options expiration date.
Mondelez International Inc. (MDLZ) -- New Covered Calls Position
The buy/write transaction was:
3/19/2024 Bought 300 Mondelez shares @ $72.25
3/19/2024 Sold 2 MDLZ 4/5/2024 $71.00 Call options @ $1.65 per share
. The Implied Volatility of these Calls was 11.9 when this position was established.
Two possible overall performance results (including commissions) would be as follows:
Covered Calls Net Investment: $21,182.01
= ($72.25 - $1.65) * 300 shares + $2.01 commission
Net Profit Components:
(a) Options Income: +$492.99
= ($1.65 * 300 shares) - $2.01 commission
(b) Dividend Income (If Mondelez shares assigned on 3/26/2024, the business day prior to the 3/27/2024 ex-dividend date): = +$0.00; or
(b) Dividend Income (If MDLZ shares assigned at the 4/5/2024 options expiration date): +$127.50
= $.425 per share x 300 shares
(c) Capital Appreciation (If Mondelez shares assigned early on 3/26/2024): -$375.00
= ($71.00 strike price -$72.25 stock purchase price) * 300 shares; or
(c) Capital Appreciation (If MDLZ shares assigned with stock above the $71.00 strike price at the April 5th options expiration): -$375.00
= ($71.00 -$72.25) * 300 shares
1. Potential Net Profit (If Mondelez shares assigned on 3/26/2024, the day prior to the March 27th ex-dividend date): +$117.99
= (+$492.99 options income +$0.00 dividend income - $375.00 capital appreciation)
2. Potential Net Profit (If Mondelez price is above $71.00 strike price at the April 5th options expiration): +$245.49
= (+$492.99 options income +$127.50 dividend income - $375.00 capital appreciation)
1. Absolute Return-on-Investment (If Mondelez shares assigned early on 3/26/2024, the day prior to the March 27th, 2024 ex-dividend date): +0.6%
= +$117.99/$21,182.01
Equivalent Annualized Return-on-Investment (If assigned early on day prior to ex-div date): +25.4%
= (+$117.99/$21,182.01) * (365/8 days)
2. Absolute Return-on-Investment (If MDLZ price is above $71.00 strike price at the April 5th options expiration date): +1.2%
= +$245.49/$21,182.01
Equivalent Annualized Return-on-Investment (If assigned on the 4/5/2024 options expiration date): +24.9%
= (+$245.49/$21,182.01) * (365/17 days)
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, only seven of the nine criteria are achieved for this Mondelez International Inc. Covered Calls position.
