With less than one minute remaining in today's trading, my Covered Calls net debit limit order in Schlumberger Ltd. (now named SLB and also ticker symbol SLB) was transacted. Three hundred shares were purchased at $54.08 and three April 19th, 2024 Call options were sold at $2.48 per share at the $52.50 strike price. So, the corresponding potential time value (aka extrinsic value) profit potential is $.90 per share = [$2.48 Call options premium - ($54.08 stock purchase price - $52.50 strike price)]. Just prior to entering this position, I compared these Calls with their comparable Puts and found that the Calls provided $.20 per share higher time value, so this Covered Calls position was significantly more advantageous than a Cash-Secured Puts position would have been on an annualized-return-on-investment basis.
An in-the-money Covered Calls position was established with the Delta of the Calls at 68.2 when this buy/write limit order transaction was executed, which approximates a 68.2% probability of assignment on the April 19th, 2024 options expiration date. There is no ex-dividend prior to the options expiration date. Their next quarterly earnings report is before market open on the April 19th, 2024 options expiration date, so to avoid normal earnings report stock price volatility, I will be looking for a fortuitous opportunity to close out this position prior to the 4/19 options expiration date.
Schlumberger Ltd. is the world's leading oilfield services company, supplying technology, information
solutions and integrated project management services that optimize reservoir performance. Pertaining to portfolio diversification, I already had Covered Calls positions in six Sectors but none in Energy -- so this SLB Energy Sector position further diversifies my current holdings.
As shown below, SLB meets all twenty-one filters in my Large-Cap Value+Profitability+Growth stock screener. I have circled in green three filter results that I found especially attractive. SLB also met all filters for three more of my stock screeners, namely Earnings Growers, Future 5-Year PEG Ratios, and Quality+Value+Growth.
Schlumberger Ltd. (SLB) -- New Covered Calls Position
The net debit buy/write limit order was executed as follows:
3/26/2024 Bought 300 shares of SLB stock @ $54.08 per share.
3/26/2024 Sold 3 SLB April 19th, 2024 $52.50 Call options @ $2.48 per share. Note: the Implied Volatility of the Calls was 26.3 when this position was established.
A possible overall performance result (including commissions) for this position if it is in-the-money on the options expiration date is as follows:
Covered Calls Net Investment: $15,482.01
= ($54.08 - $2.48) * 300 shares + $2.01 commission
Net Profit Components:
(a) Options Income: +$741.99
= ($2.48 * 300 shares) - $2.01 commission
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If SLB stock is above the $52.50 strike price at the April 19th options expiration date): -$474.00
= ($52.50 strike price - $54.08 stock purchase price) * 300 shares
Potential Total Net Profit (If SLB is in-the-money and therefore assigned at expiration): +$267.99
= (+$741.99 options income + $0.00 dividend income - $474.00 capital appreciation)
Potential Absolute Return-on-Investment (If stock price is in-the-money and therefore assigned on the 4/19/2024 options expiration date): +1.7% = +$267.99/$15,482.01
Potential Equivalent Annualized-Return-on-Investment: +26.3%
= (+$267.99/$15,482.01) * (365/24 days)
