Given my current "Neutral" stock market outlook, a slightly in-the-money Covered Calls position was established with a 70.3% probability that the stock will be in-the-money and therefore assigned on its June 21st, 2024 options expiration date. The Implied Volatility of the Calls was 16.1 when this position was established and, as I prefer, there is no earnings report prior to the June 21st options expiration date since the next earnings report is on July 20th, 2024. Also, the Beta (1-Year) for Molson Coors is 0.52. LSEG (Refinitiv) has both the average rating and their optimized rating as nine (out of a maximum of 10) for Molson Coors and the average target price by the 21 analysts that follow the company is now $64.92 (+15.1% above today's stock purchase price).
Molson Coors is one of the largest brewers in the world and was formed in early 2005 via the combination of Adolph Coors Co. and Molson, Inc. They manufacture and market beer and other malt beverage products under various brands in the Americas, Europe, the Middle East, Africa, and the Asia Pacific.
As detailed below, two potential return-on-investment results are as follows: (a) +1.2% absolute return-on-investment (equivalent to +22.6% annualized return-on-investment) for the next 20 days if the stock is assigned early on the day prior to the ex-dividend date; or (b) +2.1% absolute return-on-investment (equivalent to +21.4% annualized return-on-investment) for the next 35 days if the stock is instead assigned on its June 21st, 2024 options expiration date.
The buy/write transaction was:
5/17/2024 Bought 400 Molson Coors Beverage Company shares @ $56.4295.
5/17/2024 Sold 4 TAP 6/21/2024 $55.00 Call options @ $2.11 per share.
6/6/2024 Ex-dividend of $.44 per share.
Two possible overall performance results (including commission) for this Covered Calls position are as follows:
Covered Calls Net Investment: $21,730.48
= ($56.4295 - $2.11) * 400 shares + $2.68 commission
Net Profit Components:
(a) Options Income: +$841.32
= ($2.11 * 400 shares) - $2.68 commission
(b) Dividend Income: $176.00
= ($.44 per share x 400 shares)
(c) Capital Appreciation (If shares assigned at $55.00 strike price at the 6/6/2024 options expiration date): -$571.80
+($55.00 strike price - $56.4295 stock purchase price) * 400 shares
(c) Capital Appreciation (If shares assigned at $55.00 strike price at the 6/6/2024 options expiration date): -$571.80
+($55.00 strike price - $56.4295 stock purchase price) * 400 shares
1. Total Net Profit (If stock shares assigned at $55.00 strike price on the day prior to the June 6th ex-dividend date): +$269.52
= (+$841.32 options income +$0.00 dividend income - $571.80 capital appreciation); or
2. Total Net Profit (If stock shares assigned at $55.00 strike price at the 6/21/2024 options expiration date): +$445.52
= (+$841.32 options income +$176.00 dividend income -$571.80 capital appreciation)
1. Potential Absolute Return-on-Investment (if assigned early on the day prior to the 6/6/2024 ex-dividend): +1.2%
= +$269.52/$21,730.48
Potential Annualized Return-on-Investment: +22.6%
= (+$269.52/$21,730.48) * (365/20 days); or
2. Potential Absolute Return-on-Investment (if assigned on the 6/21/2024 options expiration date): +2.1%
= +$445.52/$21,730.48
Potential Annualized Return-on-Investment: +21.4%
= (+$445.52/$21,730.48) * (365/35 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 Molson Coors Beverage Company Covered Calls position.
