Established Covered Calls in Merck & Co. Inc.

Today, a Covered Calls position was established in Merck & Co. Inc. (ticker MRK) with the purchase of 200 shares at $123.76 per share and two March 22nd, 2024 Call options were sold for $3.52 per share at the $121.00 strike price.  A moderately in-the-money Covered Calls positions was established with the Delta of the Calls at 75.2 when this buy/write transaction was executed, which approximates the probability of assignment on the March 22nd, 2024 options expiration date.  Merck goes ex-dividend at $.77 per share (2.5% dividend yield at the current stock price) on March 14th which is prior to the March 22nd options expiration date, so this dividend is included in the potential return-on-investment results shown below.  All nine criteria in the Covered Calls Advisor's Dividend Capture Strategy spreadsheet were met for this position and there is no quarterly earnings report prior to the options expiration date. 

Two potential return-on-investment results are: (a) +0.6% absolute return-on-investment (equivalent to +33.0% annualized return-on-investment for the next 7 days) if the stock is assigned early (on the last trading day prior to the March 14th, 2022 ex-dividend date); OR (b) +1.3% absolute return (equivalent to +31.0% annualized return over the next 15 days) if the stock is assigned on the March 22nd options expiration date. 

Merck & Co. Inc. (MRK) -- New Covered Calls Position
The simultaneous buy/write transaction was as follows:
3/7/2024 Bought 200 shares of Merck & Co. stock @ $123.76 per share.  
3/7/2024 Sold 2 MRK March 22nd, 2024 $121.00 Call options @ $3.52 per share.
3/14/2024 Upcoming ex-dividend of $.77 per share

Two possible overall performance results (including commissions) would be as follows:
Covered Calls Net Investment: $24,049.34
= ($123.76 - $3.52) * 200 shares + $1.34 commission

Net Profit Components:
(a) Options Income: +$704.00
= ($3.52 * 200 shares)
(b) Dividend Income (If Merck shares assigned on 3/13/2024, the business day prior to the 3/14/2024 ex-dividend date): = +$0.00; or
(b) Dividend Income (If Merck shares assigned at 3/22/2024 options expiration): +$154.00
= $.77 per share x 200 shares
(c) Capital Appreciation (If MRK shares assigned early on 3/13/2024): -$552.00
= ($121.00 strike price -$123.76 stock purchase price) * 200 shares; or
(c) Capital Appreciation (If MRK shares assigned with stock above the $121.00 strike price at the March 22nd options expiration): -$552.00
= ($121.00 -$123.76) * 200 shares

1. Potential Net Profit (If Merck shares assigned on 3/13/2024, the day prior to the March 14th ex-dividend date): +$152.00
= (+$704.00 options income +$0.00 dividend income - $552.00 capital appreciation)
2. Potential Net Profit (If MRK price is above $121.00 strike price at the March 22nd options expiration): +$306.00
= (+$704.00 options income +$154.00 dividend income - $552.00 capital appreciation)

1. Absolute Return-on-Investment (If Merck shares assigned early on 3/13/2024, the day prior to the March 14th, 2024 ex-dividend date): +0.6%
= +$152.00/$24,049.34
Equivalent Annualized Return-on-Investment (If assigned early on day prior to ex-div date): +33.0%
= (+$152.00/$24,049.34) * (365/7 days)

2. Absolute Return-on-Investment (If Merck price is above $121.00 strike price at the March 22nd options expiration): +1.3%
= +$306.00/$24,049.34
Equivalent Annualized Return-on-Investment (If assigned on 3/22/2024 options expiration date): +31.0%
= (+$306.00/$24,049.34) * (365/15 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, all nine criteria are achieved for this Merck & Co. Inc. Covered Calls position.