Late in this afternoon's trading session, a Covered Calls position was established in Euronet Worldwide Inc. (ticker EEFT). Two hundred shares were purchased at $108.22 and two April 19th, 2024 Call options were sold at the $105.00 strike price at $5.12 per share--a buy/write net debit transaction of $103.10 per share which provides a $1.90 per share time value profit potential. This Covered Calls position was preferable to its comparable Cash-Secured Puts position since the time value for the Puts was only $1.50 (versus the $1.90 obtained for these Calls). As preferred, there is no intervening quarterly earnings report prior to Euronet Worldwide's next report on 4/30/2024 which is after the 4/19/2024 options expiration date.
Euronet Worldwide is a global financial tech solutions and payments provider that operates in these three segments: (1) Electronic Funds Transfer (EFT) supports financial institutions and consumers through Euronet-owned and outsourced ATMs and POS terminals combined with value-added and transaction processing services; (2) Epay provides retail payment solutions and delivers connections between the digital content of the brands and consumers; and (3) Money Transfer provides global money transfers and currency exchange information in retail stores, apps, and websites across 198 countries and territories. Euronet Worldwide is in the Information Technology sector.
The average Target Price of the analysts covering EEFT is $121.82 which is +12.6% above today's stock purchase price. It is the only company that appeared today in my Small-to-Mid-Cap Value+Profitability+Growth stock screener by meeting all 22 filters (see chart below). It is also rated with the highest average score of 10 by LSEG Stock Reports Plus which puts it in their top 5% of the North American stock exchanges universe covered.
As detailed below, a potential return-on-investment result is +1.8% absolute return-on-investment (equivalent to +23.9% annualized
return-on-investment for the next 28 days) if the Euronet Worldwide Inc. share price is in-the-money (i.e. above the $105.00 strike price) and therefore assigned on its April 19th, 2024 options expiration date.
Euronet Worldwide Inc. (EEFT) -- New Covered Calls Position
The Buy/Write transaction was as follows:
3/22/2024 Bought 200 shares of Euronet Worldwide Inc. @ $108.22 per share.
3/22/2024 Sold 2 EEFT April 19th, 2024 $105.00 Call options @ $5.12 per share. The Implied Volatility of these Call options was 23.3 and the Delta was 68.9 when this transaction was executed.
A possible overall performance result (including commissions) for this Euronet Worldwide Inc. Covered Calls position is as follows:
Covered Calls Net Investment: $20,621.34
= ($108.22 - $5.12) * 200 shares + $1.34 commission
Net Profit:
(a) Options Income: +$1,022.66
= ($5.12 * 200 shares) - $1.34 commission
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If 200 Euronet Worldwide Inc. shares assigned at $105.00 strike price at expiration): -$644.00
+($105.00 - $108.22) * 200 shares
Total Net Profit Potential (If 200 Euronet Worldwide shares assigned at $105.00 strike price at expiration): +$378.66
= (+$1,022.66 options income +$0.00 dividend income -$644.00 capital appreciation)
Potential Absolute Return-on-Investment: +1.8%
= +$378.66/$20,621.34
Potential Annualized Return-on-Investment: +23.9%
= (+$378.66/$20,621.34) * (365/28 days)
