Established Covered Call Position in UnitedHealth Group Inc.

This afternoon a Covered Call position was established in UnitedHealth Group Inc. (ticker UNH).  One hundred shares were purchased at $494.15 and one June 28th, 2024 Call option was sold at the $480.00 strike price at $17.29 per share--a buy/write net debit transaction of $476.86 per share which provides a maximum $3.16 per share time value profit potential.  The probability of the Call being in-the-money on the options expiration date was 79.4% when this transaction occurred. In addition, there is also a $2.10 per share ex-dividend (1.7% annual dividend yield) on June 17th which is prior to the June 28th options expiration date, so this dividend is included in the potential return-on-investment results shown below. 

Two potential return-on-investment results for this UnitedHealth Group Covered Call position are as follows: (a) +0.7% absolute return-on-investment (equivalent to +48.0% annualized return-on-investment) for the next 5 days if the stock is assigned early on the last business day prior to the June 17th ex-dividend date; or (b) +1.1% absolute return-on-investment (equivalent to +25.0% annualized return-on-investment) for the next 16 days if the stock is instead assigned on its June 28th, 2024 options expiration date.

 
UnitedHealth Group Inc. (UNH) -- New Covered Call Position 

The Buy/Write transaction was as follows:
6/12/2024 Bought 100 shares of UnitedHealth Group @ $494.15 per share.  
6/12/2024 Sold 1 UNH June 28th, 2024 $480.00 Call option @ $17.29 per share.  The Implied Volatility of the Calls was 15.0 when this position was established.

6/17/2024 Upcoming ex-dividend of $2.10 per share.  

A possible overall performance result (including commissions) for this UnitedHealth Group Covered Call position is as follows: 

Covered Call Net Investment: $47,686.67

= ($494.15 - $17.29) * 100 shares + $.67 commission

Net Profit Components:
(a) Option Income: +$1,728.33
= ($17.29 * 100 shares) - $.67 commission
(b) Dividend Income: $210.00

= ($2.10 per share x 100 shares)
(c) Capital Appreciation (If shares assigned at $480.00 strike price at the 6/28/2024 options expiration date): -$1,415.00
+($480.00 strike price - $494.15 stock purchase price) * 100 shares

1. Total Net Profit (If stock shares assigned at $480.00 strike price on the last business day prior to the June 17th ex-dividend date): +$313.33

= (+$1,728.33 options income +$0.00 dividend income - $1,415.00 capital appreciation); or

2. Total Net Profit (If stock shares assigned at $480.00 strike price at the 6/28/2024 options expiration date): +$523.33

= (+$1,728.33 option income +$210.00 dividend income -$1,415.00 capital appreciation)

1. Potential Absolute Return-on-Investment (if assigned early on the day prior to the 6/17/2024 ex-dividend): +0.7%

= +$313.33/$47,686.67

Potential Annualized Return-on-Investment: +48.0%

= (+$313.33/$47,686.67) * (365/5 days); or

2. Potential Absolute Return-on-Investment (if assigned on the 6/28/2024 options expiration date): +1.1%

= +$523.33/$47,686.67

Potential Annualized Return-on-Investment: +25.0%

= (+$523.33/$47,686.67) * (365/16 days)