This position uses the Covered Calls Advisor's Dividend Capture Strategy since Las Vegas Sands has an upcoming quarterly ex-dividend of $.20 per share on Monday, May 6th which is prior to the May 17th options expiration date. This is equivalent to an absolute annual dividend yield of 1.8% and an equivalent annualized dividend yield of 7.6% = [($.20/$45.54) x (365/21 days to expiration)]. This dividend is included in the detailed return-on-investment calculations below. Either an early assignment next Friday, May 3rd (the last trading day prior to the ex-dividend date) or on the May 17th options expiration date would be desirable to the Covered Calls Advisor given the potential annualized return on investments for either outcome. Importantly to the Covered Calls Advisor, there is no quarterly earnings report prior to the options expiration date since the next earnings report on July 17th, 2024 is two months after the May 17th options expiration date.
Las Vegas Sands Corporation (LVS) -- New Covered Calls Position
The buy/write transaction was:
4/26/2024 Bought 500 Las Vegas Sands shares @ $45.54
4/26/2024 Sold 5 LVS 5/17/2024 $44.50 Call options @ $1.76 per share.
Note: Implied Volatility (IV) of the Call options was at 24.3 when this position was transacted which, as preferred, is above the current VIX of 15.2.
5/6/2024 Upcoming quarterly ex-dividend of $.20 per share.
Two possible overall performance results (including commissions) for this Las Vegas Sands Corp. Covered Calls position are as follows:
Covered Calls Net Investment: $21,893.35
= ($45.54 - $1.76) * 500 shares + $3.35 commission
Net Profit Components:
(a) Options Income: +$876.65
= ($1.76 * 500 shares) - $3.35 commission
(b) Dividend Income (If LVS Call options exercised early on May 3rd, 2024, the last business day prior to the May 6th ex-div date): +$0.00; or
(b) Dividend Income (If LVS stock assigned at the May 17th, 2024 options expiration): +$100.00
= ($.20 dividend per share x 500 shares)
(c) Capital Appreciation (If shares assigned at $44.50 strike price at the May 17th options expiration): -$520.00
+($44.50 - $45.54) * 500 shares
Either outcome provides an attractive return-on-investment result for this Las Vegas Sands investment. These returns will be achieved as long as the stock is above the $44.50 strike price at assignment. However, if the stock declines below the strike price, the breakeven price of $43.58 ($45.54 -$1.76 -$.20) provides 4.3% downside protection below today's stock purchase price.
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 Las Vegas Sands Corporation Covered Calls position.
Despite the name "Las Vegas Sands", their casino properties are primarily in Macau. Their current profitable growth is likely to continue for years to come and I like that they are spending capital to maintain their properties as top-rate destinations as well as for investor-friendly dividends and stock buybacks. The average target price of the 15 analysts covering Las Vegas Sands is $62.84 (+38.0% above today's stock purchase price). Also, Las Vegas Sands appeared in my Stock Rover Overall stock screener by meeting all 16 filter as show in this chart:
As shown on the table at the bottom of this post, all nine criteria of the Dividend Capture Strategy are met with this position. Even if the Las Vegas Sands stock price declines somewhat during the next 21 days until the options expiration date, if the stock closes above the $44.50 strike price, then a very satisfactory annualized-return-on-investment of +36.3% will be achieved. The probability that these Call options will expire in-the-money on the options expiration date was 65.2% when this position was established.
As detailed below, two potential return-on-investment results are:
- +1.6% absolute return (equivalent to +59.5% annualized
return-on-investment for the next 10 days) if the stock is assigned early (on the last business day
prior to the May 6th ex-dividend date); or
- +2.1% absolute return (equivalent to +36.3% annualized return-on-investment over the next 21 days) if the stock is assigned on the May 17th, 2024 options expiration date.
The buy/write transaction was:
4/26/2024 Bought 500 Las Vegas Sands shares @ $45.54
4/26/2024 Sold 5 LVS 5/17/2024 $44.50 Call options @ $1.76 per share.
Note: Implied Volatility (IV) of the Call options was at 24.3 when this position was transacted which, as preferred, is above the current VIX of 15.2.
5/6/2024 Upcoming quarterly ex-dividend of $.20 per share.
Two possible overall performance results (including commissions) for this Las Vegas Sands Corp. Covered Calls position are as follows:
Covered Calls Net Investment: $21,893.35
= ($45.54 - $1.76) * 500 shares + $3.35 commission
Net Profit Components:
(a) Options Income: +$876.65
= ($1.76 * 500 shares) - $3.35 commission
(b) Dividend Income (If LVS Call options exercised early on May 3rd, 2024, the last business day prior to the May 6th ex-div date): +$0.00; or
(b) Dividend Income (If LVS stock assigned at the May 17th, 2024 options expiration): +$100.00
= ($.20 dividend per share x 500 shares)
(c) Capital Appreciation (If Las Vegas Sand's Call options assigned early on May 6th): -$520.00
+($44.50 - $45.54) * 500 shares; or(c) Capital Appreciation (If shares assigned at $44.50 strike price at the May 17th options expiration): -$520.00
+($44.50 - $45.54) * 500 shares
1. Total Net Profit [If option exercised early (business day prior to the May 6th ex-dividend date)]: +$356.65
= (+$876.65 options income +$0.00 dividend income -$520.00 capital appreciation); or
2. Total Net Profit (If LVS's shares assigned at $44.50 at the May 17th, 2024 expiration): +$456.65
= (+$876.65 options income + $100.00 dividend income - $520.00 capital appreciation)
1. Potential Absolute Return-on-Investment [If option exercised on business day prior to ex-dividend date]: +1.6%
= +$356.65/$21,893.35
Potential Annualized Return (If option exercised early): +59.5%
= (+$356.65/$21,893.35) * (365/10 days); or
2. Potential Absolute Return-on-Investment (If LVS's shares assigned on May 17th options expiration date): +2.1%
= +$456.65/$21,893.35
Potential Annualized Return (If Las Vegas Sand's shares assigned at $44.50 at the 5/17/2024 options expiration date): +36.3%
= (+$456.65/$21,893.35) * (365/21 days)
Either outcome provides an attractive return-on-investment result for this Las Vegas Sands investment. These returns will be achieved as long as the stock is above the $44.50 strike price at assignment. However, if the stock declines below the strike price, the breakeven price of $43.58 ($45.54 -$1.76 -$.20) provides 4.3% downside protection below today's stock purchase price.
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 Las Vegas Sands Corporation Covered Calls position.
