Monthly Results for December 2024

This summary report provides the results on all positions that have been closed out during December 2024.  During this past month, the Covered Calls Advisor Portfolio held a total of thirteen positions that were closed out.  Five positions were closed out at a profit and eight Covered Calls positions were out-of-the-money on their respective options expiration dates, so these stocks remained in the Covered Calls Advisor Portfolio.  

Because of my concerns about the stock market in upcoming weeks, I sold all eight remaining positions today (all at a net loss) and will keep the proceeds invested in a Schwab Money Market Fund until I am confident of a more advantageous stock and Covered Calls investing environment.  Since my wife and I are now in our 70s, we are more comfortable with preserving our existing investment capital as part of our estate plan rather than continuing with investment risks during periods like now when we perceive a greater likelihood of market underperformance.  I will continue with my Covered Calls investing strategy whenever I identify specific opportunities with especially attractive risk/reward profiles and, as always, will post these positions on my Covered Calls Advisor Blog the same day the transactions occur.       

The specific results for each of these thirteen closed positions are summarized as follows: 

• Four Covered Calls positions expired in-the-money on their weekly options expiration dates with the following results: 
1. Hewlett Packard Enterprise Company -- +1.4% absolute return-on-investment in 10 days (equivalent to a +49.6% annualized return-on-investment).
2. Netease Inc. -- +1.5% absolute return-on-investment in 11 days (equivalent to a +50.4% annualized return-on-investment).
3. Nvidia Corporation (12/6/2024 expiration) -- +2.5% absolute return-on-investment in 15 days (equivalent to a +61.0% annualized return-on-investment).
4. Nvidia Corporation (12/27/2024 expiration) -- +2.5% absolute return-on-investment in 10 days (equivalent to a +90.8% annualized return-on-investment).

• One Covered Calls position was closed out by early assignment on the last trading day prior to its ex-dividend date with the following result: 
1. DICK'S Sporting Goods Inc. -- +1.2% absolute return-on-investment in 10 days (equivalent to a +45.6% annualized return-on-investment). 

• Eight Covered Calls positions were out-of-the-money on their respective options expiration dates and I decided to close them out today with the following results: 
1. Bank of America Corporation -- -4.3% absolute return-on-investment in 28 days (equivalent to a -56.4% annualized return-on-investment).
2. Global Payments Inc. -- -2.0% absolute return-on-investment in 21 days (equivalent to a -35.0% annualized return-on-investment).
3. iShares 20+ Years Treasury Bonds ETF -- -2.5% absolute return-on-investment in 26 days (equivalent to a -35.1% annualized return-on-investment).
4. Lam Research Corporation -- -0.7% absolute return-on-investment in 21 days (equivalent to a -12.8% annualized return-on-investment).
5. Merck & Co. Inc. -- -0.6% absolute return-on-investment in 24 days (equivalent to a -8.5% annualized return-on-investment).
6. Schlumberger (SLB) -- -4.2% absolute return-on-investment in 28 days (equivalent to a -54.4% annualized return-on-investment).
7. Tyson Foods Inc. -- -9.9% absolute return-on-investment in 34 days (equivalent to a -106.4% annualized return-on-investment).
8. Uber Technologies Inc. -- -7.2% absolute return-on-investment in 24 days (equivalent to a -106.4% annualized return-on-investment). 

This Covered Calls Advisor blog is available to anyone interested in learning about implementing a successful Covered Calls investing strategy.  As always, I also encourage you to email me at partlow@cox.net any time you would like my feedback on your Covered Call position ideas or your questions on anything related to the Covered Calls investing strategy.

 

Best Wishes to All for a Happy and Prosperous New Year,

Jeff Partlow
Covered Calls Advisor
partlow@cox.net

Covered Calls Established in Hewlett Packard Enterprise Company and Nvidia Corporation

This morning short-term Covered Calls positions were established in Hewlett Packard Enterprise Co. (ticker HPE) and NVIDIA Corporation (ticker NVDA). Five hundred shares of Hewlett Packard Enterprise were purchase at $21.54 per share and five December 27th, 2024 Call options were sold for $.70 per share at the $21.00 strike price.  A moderately in-the-money Covered Calls positions was established and the probability that the Calls will expire in-the-money on the 12/27/2024 options expiration date was 71.6% when this position was established.  

In addition to the $.16 potential time value decay profit at assignment for this position, HPE also goes ex-dividend this Friday (12/20/2024) at $.13 per share (2.4% dividend yield) which is prior to the December 27th options expiration date -- so this dividend is included in the potential return-on-investment results detailed below.  As I prefer, the next quarterly earnings report on March 6th, 2025 is after the Dec. 27th, 2024 options expiration date.

For Nvidia Corporation, my net debit limit order to establish a Covered Call at the December 27th, 2024 $125.00 strike price was transacted at my $121.96 net price.  One hundred shares were purchased at $127.34 and one 12/27/2024 $125.00 Call was sold at $5.38.  The probability that the Calls will expire in-the-money (and therefore be assigned) on the 12/27 options expiration date was 56.7% when this position was established.     

As detailed below, potential return-on-investment results are: (a) for Hewlett Packard Enterprises: +1.4% absolute return (equivalent to +49.6% annualized return-on-investment over the next 10 days) if the stock is assigned on the December 27th, 2024 options expiration date; and (b) for Nvidia Corporation: +2.5% absolute return (equivalent to +90.8% annualized return-on-investment over the next 10 days) if the stock is assigned on its December 27th, 2024 options expiration date

Hewlett Packard Enterprise Company (HPE) -- New Covered Calls Position 

The Buy/Write transaction was as follows:
12/17/2024 Bought 500 shares of Hewlett Packard Enterprise Co. shares @ $21.54 per share.  
12/17/2024 Sold 5 HPE December 27th, 2024 $25.00 Call options @ $.70 per share.  The Implied Volatility of these Call options was 21.2 today when this transaction was executed. 

A possible overall performance result (including commissions) if this stock is in-the-money (and therefore the stock is assigned (i.e. sold) at the $21.00 strike price) on the Dec. 27th options expiration date is as follows:

Covered Calls Net Investment: $10,423.35
= ($21.54 - $.70) * 500 shares + $3.35 commission

Net Profit:
(a) Options Income: +$346.65
= ($.70 * 500 shares) - $3.35 commission
(b) Dividend Income (If assigned on the 12/27/2024 options expiration date): +$65.00
= $.13 x 500 shares
(c) Capital Appreciation (If 500 HPE shares assigned at the $21.00 strike price): -$270.00
+($21.00 strike price - $21.54 stock purchase price) * 500 shares

Total Net Profit Potential: +$141.65
= (+$346.65 options income + $65.00 dividend income - $270.00 capital appreciation)

Potential Absolute Return-on-Investment: +1.4%
= +$141.65/$10,423.35
Potential Annualized Return-on-Investment (if HPE shares are in-the-money and therefore assigned on their 12/27/2024 options expiration date): +49.6%
= (+$141.65/$10,423.35) * (365/10 days)

Nvidia Corporation (NVDA) -- New Covered Call Position

The buy/write market order transaction was as follows:
12/17/2024 Bought 100 Nvidia Corporation shares at $127.34.

12/17/2024 Sold 1 NVDA 12/27/2024 $125.00 Call option @ $5.38 per share.  The Implied Volatility of the Calls was very high at 45.7 when this Call option was sold today.

A possible overall performance result (including commissions) for this Nvidia Corporation Covered Call position is as follows:
Covered Calls Net Investment: $12,196.67
= ($127.34 - $5.38) * 100 shares + $.67 commission

Net Profit:
(a) Option Income: +$537.33
= ($5.38 * 100 shares) - $.67 commission
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If 100 Nvidia shares assigned at the $125.00 strike price at expiration): -$234.00
+($125.00 - $127.34) * 100 shares

Total Net Profit Potential (If 100 Nvidia shares are in-the-money and therefore assigned at the $125.00 strike price at the options expiration date): +$303.33
= (+$537.33 option income + $0.00 dividend income - $234.00 capital appreciation)

Potential Absolute Return-on-Investment: +2.5%
= +$303.33/$12,196.67
Potential Annualized Return-on-Investment: +90.8%
= (+$303.33/$12,196.67) * (365/10 days)

Update on Three Covered Calls that Expired Out-of-the-Money Last Friday

The Covered Calls Advisor Portfolio had three Covered Call positions where the expiration date of the Calls was last Friday (December 13th).  The three positions were in Bank of America Corporation, Fedex Corporation, and Schlumberger (SLB), and all three Calls expired out-of-the-money with the stock prices below their respective strike prices.  This morning, my decisions regarding the stock of each company was as follows: 

(1) Bank of America -- the stock closed last Friday at $45.67 which was below the $46.50 strike price.  I have not made a decision yet on how to proceed with the 200 BAC shares in this position but will do so sometime this week and will make a post updating my actions on the same day the transaction occurs.  

(2) Fedex Corporation -- the stock closed at $283.42 which was well below the $290.00 strike price.  A significant factor in the decline was the research report of Morgan Stanley in which they stated that they were seeing "continued volume/price/mix headwinds exacerbated by rolloff of USPS revenues, compressed peak season, and slowing DRIVE gains."  In addition, Fedex's next quarterly report is this Thursday and since my preference is to avoid holding positions through earnings reports, I decided to sell the 100 shares this morning when the stock was at $284.95.  Detailed results for this position are provided below.  

(3) Schlumberger Ltd. (SLB) -- the stock closed last Friday at $40.22 which was below the $42.00 strike price.  This morning I decided to continue this Covered Calls position for another two weeks by selling four Dec. 27th $41.50 Calls for $.50 per share when the stock was at $40.72.  Potential results for this position are detailed below.

     

Fedex Corporation (FDX) -- Closed Out Covered Call Position 

The buy/write transaction was:
12/2/2024 Bought 100 Fedex shares @ $296.04.
12/2/2024 Sold 1 FDX 12/13/2024 $290.00 Call option @ $7.94 per share.
Note: Implied Volatility (IV) of the Call options was at 14.7 when this position was transacted which, as I prefer, is above the current VIX of 13.4.   
12/9/2024 Quarterly ex-dividend of $1.38 per share. 

12/13/2024 FDX Call option expired out-of-the-money and the 100 FDX shares remain in the Covered Calls Advisor Portfolio.

12/16/2024 Sold 100 FDX shares at $284.95 per share.

The overall performance results (including commissions) for this Fedex Corp. Covered Calls position were as follows:
Covered Calls Net Investment: $28,810.67
= ($296.04 - $7.94) * 100 shares + $.67 commission

Net Profit Components:
(a) Options Income: +$793.33
= ($7.94 * 100 shares) - $.67 commission
(b) Dividend Income: +$138.00
= ($1.38 dividends per share x 100 shares)

(c) Capital Appreciation (Fedex shares sold at $284.95): -$1,109.00

+($284.95 stock sales price - $296.04 stock purchase price) * 100 shares

Total Net Loss: -$177.67

= (+$793.33 options income +$138.00 dividend income - $1,109.00 capital appreciation)

Absolute Return-on-Investment: -0.6%

= -$177.67/$28,810.67

Annualized Return-on-Investment: -16.1%

= (-$177.67/$28,810.67) * (365/14 days)

Schlumberger Ltd. (SLB) -- Rollout of Covered Calls Position

The buy/write transaction was:
12/2/2024 Bought 400 SLB shares @ $43.22.
12/2/2024 Sold 4 USB 12/13/2024 $42.00 Call options @ $1.48 per share.
12/4/2024 Quarterly ex-dividend of $.275 per share. 

12/13/2024 Four SLB Call options expired out-of-the-money so the 400 SLB shares remain in the Covered Calls Advisor Portfolio.

12/16/2024 Continued this SLB Covered Calls position by selling 4 SLB December 27th, 2024 $41.50 Calls at $.50 per share when SLB's stock price was $40.72 per share.

Two possible overall performance results (including commissions) for this SLB Covered Calls position are as follows:
Covered Calls Net Investment: $16,698.68
= ($43.22 - $1.48) * 400 shares + $2.68 commission

Net Profit Components:
(a) Options Income: +$786.64
= ($1.48 + $.50) x 400 shares - $5.36 commissions
(b) Dividend Income: +$110.00
= ($.275 dividends per share x 400 shares)

(c) Capital Appreciation (If SLB's stock price unchanged at $40.72 on the December 27th options expiration date): -$1,000.00

+($40.72 static stock price - $43.22 stock purchase price) * 400 shares; or
(c) Capital Appreciation (If shares assigned at $41.50 strike price on the 12/27/2024 options expiration): -$688.00
+($41.50 strike price - $43.22 SLB stock purchase price) * 400 shares

1. Total Net Profit (If stock price unchanged at $40.72 on the 12/27/2024 options expiration date): -$103.36

= (+$786.64 options income +$110.00 dividend income - $1,000.00 capital appreciation); or

2. Total Net Profit (If 400 SLB shares assigned at the $41.50 strike price at the Dec. 27th, 2024 expiration): +$208.64

= (+$786.64 options income + $110.00 dividend income - $688.00 capital appreciation)

1. Potential Absolute Return-on-Investment [If stock price unchanged at $40.72 on the 12/27/2024 options expiration date): -0.6%

= -$103.36/$16,698.68

Potential Annualized Return-on-Investment (If option exercised early): -9.0%

= (-$103.36/$16,698.68) * (365/25 days); or

2. Potential Absolute Return-on-Investment (If SLB's shares assigned on the Dec. 13th options expiration date): +1.2%

= +$211.32/$16,698.68

Potential Annualized Return-on-Investment (If 400 SLB shares assigned at the $41.50 strike price at the Dec. 27th, 2024 expiration): +18.2%

= (+$208.64/$16,698.68) * (365/25 days)

Early Assignment of Covered Call Position in DICK'S Sporting Goods Inc.

I was notified by Schwab early this morning that the one DICK'S Sporting Goods Inc. December 20th, 2024 Call option was exercised early yesterday.  Because DICK'S stock price increased from $211.26 when this position was established to $218.86 at yesterday's market close, the original $2.84 time value in the Call when the position was established had declined on yesterday's market close to $0.84.  So, with 7 days remaining until the December 20th options expiration date, the owner of these Calls exercised their option to buy the 100 shares at the $202.50 strike price in order to receive today's $1.10 per share ex-dividend. 

I was surprised that the owner of the Call exercised their option in this instance since they decided to immediately forego $.84 time value profit potential (which I am pleased to have received as an immediate profit addition to my return-on-investment result for this position).  I am also pleased with the +45.6% annualized-return-on-investment (aroi) result achieved today by early assignment since it exceeds the maximum +38.6% aroi that might have been achieved if this position instead remained in-the-money and would therefore be assigned on its December 20th, 2024 options expiration date.   

The post when this DICK'S Sporting Goods Inc. Covered Call position was originally established is here.  As detailed below, the return-on-investment result for this Covered Calls position was +1.2% absolute return in 10 days (equivalent to a +45.6% annualized return-on-investment).

DICK'S Sporting Goods Inc. (DKS) -- Covered Call Position Closed Out by Early Assignment
The simultaneous buy/write transaction was:
12/3/2024 Bought 100 DICK'S Sporting Goods Inc. shares @ $211.26.
12/3/2024 Sold 1 DICK'S 12/20/2024 $202.50 Call option @ $11.60 per share.
12/12/2024 One DICK'S Sporting Goods Calls was exercised on the day prior to its December 13th, 2024 ex-dividend date, so the Call expired and the 100 Dell shares were sold at the $202.50 strike price.   

The overall performance results (including commissions) for this DICK'S Sporting Goods Inc. Covered Call position is as follows:
Covered Call Net Investment: $19,966.67
= ($211.26 - $11.60) * 100 shares + $.67 commission

Net Profit:
(a) Option Income: +$1,159.33
= ($11.60 * 100 shares) - $.67 commission
(b) Dividend Income: (DICK'S stock assigned early on the day prior to the Dec. 13th option expiration date) = +$0.00

(c) Capital Appreciation: -$910.00
+($202.50 strike price - $211.26 stock purchase price) * 100 shares

Total Net Profit: +$249.33

= (+$1,159.33 option income +$0.00 dividend income - $910.00 capital appreciation)

Absolute Return-on-Investment: +1.2%

= +$249.33/$19,966.67

Annualized Return-on-Investment: +45.6%

= (+$249.33/$19,966.67) * (365/10 days)

Covered Calls Established in Global Payments Inc.

In this afternoon's trading session, a short-term Covered Calls position was established in Global Payments Inc. (ticker GPN) with the purchase of 300 shares at $117.74 per share and three December 20th, 2024 Call options were sold for $3.72 per share at the $115.00 strike price.  A moderately in-the-money Covered Calls positions was established with the probability that the Calls will expire in-the-money on the 12/20/2024 options expiration date was 71.3%.  

In addition to the $.98 potential time value decay profit at assignment for this position, Global Payments also goes ex-dividend this Friday (12/13/2024) at $.25 per share (0.8% dividend yield) which is prior to the December 20th options expiration date -- so this dividend is included in the potential return-on-investment results detailed below.  As I prefer, the next quarterly earnings report on February 13th, 2025 is after the Dec. 20th, 2024 options expiration date.

As detailed below, a potential return-on-investment result is:  +1.1% absolute return (equivalent to +35.6% annualized return-on-investment over the next 11 days) if the stock is assigned on the December 20th, 2024 options expiration date.

Global Payments Inc. (GPN) -- New Covered Calls Position 

The Buy/Write transaction was as follows:
12/9/2024 Bought 300 shares of Global Payments Inc. shares @ $117.74 per share.  
12/9/2024 Sold 3 GPN December 20th, 2024 $115.00 Call options @ $3.72 per share.  The Implied Volatility of these Call options was 21.5 today when this transaction was executed. 

A possible overall performance result (including commissions) if this stock is in-the-money (and therefore the stock is assigned (i.e. sold) at the $115.00 strike price) on the Dec. 20th options expiration date is as follows:

Covered Calls Net Investment: $34,208.01
= ($117.74 - $3.72) * 300 shares + $2.01 commission

Net Profit:
(a) Options Income: +$1,113.99
= ($3.72 * 300 shares) - $2.01 commission
(b) Dividend Income (If assigned on the 12/20/2024 options expiration date): +$75.00
= $.25 x 300 shares
(c) Capital Appreciation (If 300 Global Payments shares assigned at the $115.00 strike price): -$822.00
+($115.00 strike price - $117.74 stock purchase price) * 300 shares

Total Net Profit Potential (If 300 GPN shares assigned at the $115.00 strike price at the options expiration date): +$366.99
= (+$1,113.99 options income + $75.00 dividend income - $822.00 capital appreciation)

Potential Absolute Return-on-Investment: +1.1%
= +$366.99/$34,208.01
Potential Annualized Return-on-Investment (if GPN shares assigned on their 12/20/2024 options expiration date): +35.6%
= (+$366.99/$34,208.01) * (365/11 days)

December 6th, 2024 Weekly Options Expiration Results

One of the nice features of the Covered Calls investing strategy is that I can easily calculate the potential return-on-investment (roi) results if the stock price were to close on the options expiration date at any possible price.  For example, I always make this calculation for the circumstance if the stock were to be in-the-money (i.e. above the Call option's strike price) on its options expiration date.  For any option chain that I am considering, this calculation provides me with the maximum potential return-on-investment result for any Covered Calls position I am contemplating establishing, and it does this in advance (i.e. before) I enter the trade. Using Schwab's Think or Swim platform I also look at the real-time probability that any particular Call option chain I'm evaluating will be assigned (i.e. close in-the-money) on its options expiration date.  Knowing both the risk (probability %) and reward (return-on-investment) for any specific Covered Calls position prior to making a Covered Calls investment is invaluable for making decisions that are consistent with my personal risk tolerance profile.      

The Covered Calls Advisor Portfolio had two Covered Calls positions with December 6th, 2024 weekly options expirations.  Both positions closed on their options expiration date yesterday with their stock prices in-the-money, so the Calls expired with no remaining value and the Covered Calls were closed out with the stocks sold at their respective strike prices; and their maximum potential return-on-investment results were achieved on their options expiration dates.  A summary of the return-on-investment results for each position is as follows:

1. Netease Inc. ADR (NTES) -- +1.5% absolute return-on-investment (equivalent to +50.4% annualized return-on-investment) for the 11 days of this investment.  This NTES position had a $83.00 strike price and it closed at $91.29 yesterday.  The blog post showing the details of this position on the day the position was originally established is here. 

2. Nvidia Corporation (NVDA) -- +2.5% absolute return-on-investment (equivalent to +61.0% annualized return-on-investment) for the 15 days of this investment.  This Nvidia position had a $140.00 strike price and it closed at $142.44 yesterday.  The blog post showing the details of this position on the day the position was originally established is here.

As always, I welcome your comments or questions at the email address shown below on any topics related to the Covered Calls investing strategy. 

Jeff Partlow
The Covered Calls Advisor
partlow@cox.net

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 $103.02 per share and two December 27th, 2024 weekly Call options were sold for $2.90 per share at the $101.00 strike price.  A moderately in-the-money Covered Calls positions was established with the probability that the Calls will expire in-the-money on the 12/27/2024 options expiration date was 70.3%.  In addition to the $.88 potential time value decay profit at assignment for this position, Merck also goes ex-dividend at $.81 per share (3.1% dividend yield) on December 16th which is prior to the December 27th options expiration date -- so this dividend is included in the potential return-on-investment results detailed below.  As I prefer, the next quarterly earnings report on February 4th, 2025 is after the Dec. 27th options expiration date.

Of the 41 stocks that met all 22 criteria in my Quantitative Value (Value+Quality) stock screener, Merck ranked #1 with the highest total score.  The scores for each factor are shown in the image below.  You might notice there that the "Price to Consensus Target" is +29.0%.  Also, Merck appeared in two additional of my stock screeners, namely the StockRover Overall stock screener and the (Next Year EPS Growth > P/E Ratio and Future 5-Yr. PEG <1.2) screener.  

Two potential return-on-investment results are: (a) +0.9% absolute return-on-investment (equivalent to +32.1% annualized return-on-investment for the next 10 days) if the stock is assigned early on December 13th (the last trading day prior to the December 16th, 2024 ex-dividend date); OR (b) +1.7% absolute return (equivalent to +29.3% annualized return over the next 21 days) if the stock is assigned on the December 27th, 2024 options expiration date. 

Merck & Co. Inc. (MRK) -- New Covered Calls Position
The simultaneous buy/write transaction was as follows:
12/6/2024 Bought 200 shares of Merck & Co. stock @ $103.02 per share.  
12/6/2024 Sold 2 MRK December 27th, 2024 $101.00 Call options @ $2.90 per share.
12/16/2024 Upcoming ex-dividend of $.81 per share

Two possible overall performance results (including commissions) would be as follows:
Covered Calls Net Investment: $20,025.34
= ($103.02 - $2.90) * 200 shares + $1.34 commission

Net Profit Components:
(a) Options Income: +$580.00
= ($2.90 * 200 shares)
(b) Dividend Income (If Merck shares assigned on 12/13/2024, the business day prior to the 12/16/2024 ex-dividend date): = +$0.00; or
(b) Dividend Income (If Merck shares assigned at the 12/27/2024 options expiration): +$162.00
= $.81 per share x 200 shares
(c) Capital Appreciation (If MRK shares assigned early on 12/16/2024): -$404.00
= ($101.00 strike price - $103.02 stock purchase price) * 200 shares; or
(c) Capital Appreciation (If MRK shares assigned with stock above the $101.00 strike price at the Dec. 27th options expiration date): -$404.00
= ($101.00 -$103.02) * 200 shares

1. Potential Net Profit (If Merck shares assigned on the Dec. 16th ex-dividend date): +$176.00
= (+$580.00 options income +$0.00 dividend income - $404.00 capital appreciation)
2. Potential Net Profit (If MRK price is above $101.00 strike price at the Dec 27th options expiration): +$338.00
= (+$580.00 options income +$162.00 dividend income - $404.00 capital appreciation)

1. Absolute Return-on-Investment (If Merck shares assigned early on the Dec. 16th, 2024 ex-dividend date): +0.9%
= +$176.00/$20,025.34
Equivalent Annualized Return-on-Investment (If assigned early): +32.1%
= (+$176.00/$20,025.34) * (365/10 days)

2. Absolute Return-on-Investment (If Merck price is above the $101.00 strike price at the December 27th options expiration): +1.7%
= +$338.00/$20,025.34
Equivalent Annualized Return-on-Investment (If assigned on the 12/27/2024 options expiration date): +29.3%
= (+$338.00/$20,025.34) * (365/21 days)

Covered Calls Position Established in Uber Technologies Inc.

This morning my buy/write net debit limit order was executed and 300 shares of Uber Technologies Inc.(ticker symbol UBER) stock were purchased at $65.68 and 3 December 20th, 2024 $64.00 Call options were sold at $2.92 per share -- a net debit of $62.76 per share.  So the potential time value profit if the stock is in-the-money and therefore closed out by assignment on the options expiration date is $1.24 per share [$2.92 Call options premium - ($65.68 stock purchase price - $64.00 strike price)]. The probability that the stock will be in-the-money and therefore assigned on its options expiration date was 64.5% when this order was transacted.  

As detailed below, a potential outcome for this Uber Technologies investment is +1.9% absolute return-on-investment for the next 14 days (equivalent to +49.0% annualized-return-on-investment) if the stock closes above the $64.00 strike price on the December 20th, 2024 options expiration date.

Uber Technologies Inc. (UBER) -- New Covered Calls Position

The net debit buy/write limit order was executed as follows:
12/6/2024 Bought 300 shares of Uber Technologies Inc. stock @ $65.68 per share.  
12/6/2024 Sold 3 Uber December 20th, 2024 $64.00 Call options @ $2.92 per share.
Note: this was a simultaneous Buy/Write transaction and the Implied Volatility of the Calls was 34.9 when this position was established which, as preferred, is well above the current VIX of 12.9.  

A possible overall performance result (including commissions) if this position is assigned on its 12/20/2024 options expiration date is follows:
Covered Calls Net Investment: $19,706.01
= ($65.68 - $2.92) * 300 shares + $2.01 commission

Net Profit Components:
(a) Options Income: +$873.99
= ($2.92 * 300 shares) - $2.01 commission
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If Uber stock is above the $64.00 strike price at the 12/20/2024 options expiration date): -$504.00
= ($64.00 - $65.68) * 300 shares

Potential Total Net Profit (If assigned at expiration): +$369.99
= (+$873.99 options income + $0.00 dividend income - $504.00 capital appreciation)

Potential Absolute Return-on-Investment: +1.9%
= +$369.99/$19,706.01
Potential Equivalent Annualized-Return-on-Investment: +49.0%
= (+$369.99/$19,706.01) * (365/14 days)

Established Covered Call Position in DICK'S Sporting Goods Inc.

A Covered Call position was established in DICK'S Sporting Goods Inc. (ticker DKS) when the Covered Calls Advisor's buy/write limit order at a net debit limit price of $199.66 was executed.  One hundred shares were purchased at $211.26 and one December 20th, 2024 Call option was sold at $11.60 at the $202.50 strike price.  The potential time value profit is $2.84 per share = [$202.50 strike price - ($211.26 stock purchase price - $11.60 Call options price)].   A moderately in-the-money Covered Calls position was established and the probability that the position will be assigned on the options expiration date was 71.1% when this position was established.  As is my preference, there is no earnings report prior to the options expiration date.

DICK'S goes ex-dividend exactly one week prior to the options expiration date on December 13th at $1.10 per share (a 2.1% annual dividend yield).  As detailed at the bottom of this post, this Covered Call meets all nine criteria of my Dividend Capture Strategy (see here).

DICK'S also meets all five of my current primary evaluation criteria for identifying worthwhile candidates for investing:

In addition, DICK'S passed all the criteria in the 'Ratings versus Peers' stock screener, which is shown here:

 

As detailed below, two potential return-on-investment results for this DICK'S Sporting Goods Inc. Covered Call position is: (1) +1.2% absolute return (equivalent to +45.6% annualized return-on-investment for the next 10 days) if the stock is assigned early on the day prior to its December 13th ex-dividend date; OR (2) +1.8% absolute return (equivalent to +38.6% annualized return-on-investment for the next 17 days) if DICK'S stock is assigned on the December 20th options expiration date. 

DICK'S Sporting Goods Inc. (DKS) -- New Covered Call Position

The buy/write transaction was:
12/3/2024 Bought 100 DICK'S Sporting Goods shares @ $211.26
12/3/2024 Sold 1 DKS 12/20/2024 $202.50 Call option @ $11.60 per share.  The implied volatility of this DKS Call option was 31.8 when this Covered Call transaction was executed.

Two possible overall performance results (including commissions) for this DICK'S Sporting Goods Covered Call position is as follows:
Covered Calls Net Investment: $19,966.67
= ($211.26 - $11.60) * 100 shares + $.67 commission

Net Profit:
(a) Options Income: +$1,159.33
= ($11.60 * 100 shares) - $.67 commission
(b) Dividend Income: (If stock assigned early on the day prior to the Dec. 13th option expiration date) = +$0.00; OR
(b) Dividend Income: (If stock assigned on the Dec. 20th option expiration date) = +$110.00

= $1.10 per share x 100 shares
(c) Capital Appreciation (If DICK'S shares assigned early on the day prior to the Dec. 13th ex-dividend date): -$910.00
+($202.50 strike price - $211.26 stock purchase price) * 100 shares; OR

(c) Capital Appreciation (If DICK'S shares assigned on the 12/13/2024 options expiration date): -$910.00
= +($202.50 - $211.26) * 100 shares

1. Total Net Profit (If options exercised early): +$249.33

= (+$1,159.33 options income +$0.00 dividend income - $910.00 capital appreciation)

2. Total Net Profit (If options exercised on the December 13th, 2024 options expiration date): +$359.33

= (+$1,159.33 options income +$110.00 dividend income - $910.00 capital appreciation)

1. Potential Absolute Return-on-Investment (If the DICK'S Sporting Goods shares are assigned early on the day prior to the 12/13/2024 options expiration date): +1.2%

= +$249.33/$19,966.67

Potential Annualized Return-on-Investment (If 100 DICK'S shares assigned at the $202.50 strike price on the Dec. 13th, 2024 options expiration date): +45.6%

= (+$249.33/$19,966.67) * (365/17 days)

2. Potential Absolute Return-on-Investment (If the DICK'S Sporting Goods shares are assigned at the $202.50 strike price at the 9/13/2024 options expiration date): +1.8%

= +$359.33/$19,966.67

Potential Annualized Return-on-Investment (If 200 DICK'S shares assigned at the $130.00 strike price on the August 4th, 2023 options expiration date): +38.6%

= (+$359.33/$19,966.67) * (365/17 days)

Dividend Capture Strategy chart for DICK'S Covered Call Position (meets all 9 criteria):

Established Covered Calls Position in the iShares 20+ Year Treasury Bond ETF

Today a short-term in-the-money Covered Calls position was established in the iShares 20+ Year Treasury Bond ETF (ticker TLT) at the December 27th, 2024 weekly options expiration date and at the $91.00 strike price.  Two hundred TLT shares were purchased at $92.60 per share and two 12/27/2024 $91.00 Calls were sold at $2.20 per share.  The corresponding potential time value profit is $.60 per share [$2.20 Call options premium - ($91.00 strike price - $92.60 ETF purchase price)].  The probability that these Calls will be in-the-money on the options expiration date was 72.4% when this position was established.  In addition to the potential time value profit of $.60 per share, there is an upcoming ex-distribution estimated to occur on December 18th at $.351 per share and which is prior to the December 27th options expiration date.  This is a repeat of a TLT Covered Calls position that was closed out on November 29th for an annualized return-on-investment achieved of +18.2%.  

Many investors are satisfied with buying-and-holding T-Bonds, but we Covered Calls investors know we can do better than the 4.46% yield currently available buying 20-year T Bonds.  As detailed below, two potential return-on-investment results are: (a) +0.7% absolute return (equivalent to +16.0% annualized return-on-investment for the next 15 days) if TLT is assigned early on the day prior to the Dec. 18th, 2024 ex-distribution date; or (b) +1.0% absolute return (equivalent to +16.6% annualized return-on-investment for the next 23 days) if it is in-the-money and therefore assigned at market close on the December 27th, 2024 options expiration date.  

iShares 20+ Year Treasury Bond ETF (TLT) -- New Covered Calls Position 

The simultaneous buy/write transaction was as follows:
12/4/2024 Bought 200 iShares 20+ Year Treasury Bond ETF shares at $92.60.

12/4/2024 Sold 2 TLT December 27th, 2024 $91.00 Call options @ $2.20 per share.
12/18/2024 Ex-distribution of $.351 per share.

The overall performance results (including commissions) if TLT remains in-the-money at options expiration would be as follows:
Covered Calls Net Investment: $18,081.34
= ($92.60 - $2.20) * 200 shares + $1.34 commission

Net Profit:
(a) Options Income: +$438.66
= ($2.20 * 200 shares) - $1.34 commission

(b) Distribution Income [If TLT is assigned early on the last business day prior to the December 18th ex-distribution date: +$0.00
(b) Distribution Income [If TLT price is in-the-money (i.e. above the $91.00 strike price) and the position is assigned (i.e. closed out) at options expiration on Dec. 27th]: +$70.20

= $.351 distribution per share x 200 TLT shares

(c) Capital Appreciation (If TLT is assigned at the $91.00 strike price either early or on the 12/27/2024 options expiration date): -$320.00

= ($91.00 strike price - $92.60 purchase price) * 200 shares

Total Net Profit:

1.  If TLT shares are assigned early on the day prior to the ex-distribution date: +$118.66
     = (+$438.66 options income +$0.00 distribution income - $320.00 capital appreciation)

2.  If TLT share price is in-the-money (i.e. above the $91.00 strike price) at options expiration: +$188.86
= (+$438.66 options income + $70.20 distribution income - $320.00 capital appreciation)

Potential Absolute Return-on-Investment: 

1. If TLT shares are assigned early on the day prior to the ex-distribution date: +0.7%

    = +$118.66/$18,081.34

2. If TLT shares are above the $91.00 strike price at the Dec. 27th, 2024 options expiration): +1.0%

    = +$188.66/$18,081.34

Potential Annualized Return-on-Investment: 

1. If TLT shares are assigned early on the day prior to the ex-distribution date: +16.0% 

    = (+$118.66/$18,081.34) * (365/15 days)

2. If TLT shares are above the $91.00 strike price at the Dec. 27th, 2024 options expiration): +16.6%

    = (+$188.86/$18,081.34) * (365/23 days)

Three Short-Term Covered Calls Positions Established Using Dividend Capture Strategy -- Bank of America, Fedex, and Schlumberger

This morning Covered Calls were established in Bank of America Corp. (ticker BAC), Fedex Corporation (FDX), and SLB (formerly known as Schlumberger Ltd.). Short-term positions were selected for each position at the December 13th, 2024 weekly options expiration date. This strike price was preferable since the potential annualized return-on-investment in each case is higher for this 11-day duration than for the monthly 12/20/2024 monthly options expiration date. Also, in each case before establishing these positions, I had established a net buy/write limit price slightly below the midpoint of the buy/write price that existed when I entered my limit order. In each case, my limit price was executed within several minutes after I entered the orders. 

For Bank of America, 200 shares were purchased at $47.44 and 2 Dec. 13th, 2024 Call options were sold at $1.18 at the $46.50 strike price. For Fedex Corp., 100 shares were purchased at $296.04 and 1 December 13th, 2024 Call option was sold at $7.94 at the $290.00 strike price. For SLB, 400 shares were purchased at $43.22 and 4 Dec. 13th, 2024 Call options were sold at $1.48 at the $42.00 strike price. Given the Covered Calls Advisor's current "Neutral" Overall Market Meter outlook, moderately in-the-money Covered Calls positions were established.  The probability that the stock will be in-the-money on the options expiration dates was 75.0% for the Bank of America position, 72.9% for the Fedex, and 77.3% for the SLB position. 

All three positions have an intervening ex-dividend date prior to Dec. 13th, so the potential results detailed below includes the possibility of early exercise since the ex-dividends are prior to their respective options expiration dates. A positive fundamental factor is that analysts currently estimate that the earnings per share for each of these 3 companies is expected to increase over the next 12 months. Also of importance, none of the companies have a quarterly earnings report prior to their 12/13/2024 options expiration date.

Potential results for each position are detailed below.

1.  Bank of America Corporation (BAC) --

New Covered Calls Position

The buy/write transaction was:
12/2/2024 Bought 200 Bank of America Corp. shares @ $47.44
12/2/2024 Sold 2 BAC 12/13/2024 $46.50 Call options @ $1.18 per share.  The Implied Volatility of these Calls was 15.8 when this position was established.
12/6/2024 Upcoming quarterly ex-dividend of $.26 per share.

Two possible overall performance results (including commissions) would be as follows:
Covered Calls Net Investment: $9,253.34
= ($47.44 - $1.18) * 200 shares + $1.34 commission

Net Profit Components:
(a) Options Income: +$234.66
= ($1.18 * 200 shares) - $1.34 commission
(b) Dividend Income (If Bank of America shares assigned on the business day prior to the Dec. 6th ex-dividend date): = +$0.00; or
(b) Dividend Income (If BAC shares assigned at the 12/13/2024 options expiration date): +$52.00
= $.26 per share x 200 shares
(c) Capital Appreciation (If BAC shares assigned early): -$188.00
= ($46.50 strike price - $47.44 stock purchase price) * 200 shares; or
(c) Capital Appreciation (If BAC shares assigned with stock above the $46.50 strike price at the December 13th, 2024 options expiration date): -$188.00
= ($46.50 -$46.44) * 200 shares

1. Potential Net Profit (If Bank of America shares assigned on 12/5/2024, the day prior to the Dec. 6th ex-dividend date): +$46.66
= (+$234.66 options income +$0.00 dividend income - $188.00 capital appreciation)
2. Potential Net Profit (If BAC price is above $46.50 strike price at the Dec. 13th options expiration): +$98.66
= (+$234.66 options income +$52.00 dividend income - $188.00 capital appreciation)

1. Absolute Return-on-Investment (If BofA shares assigned early on 12/5/2024, the day prior to the ex-dividend date): +0.5%
= +$46.66/$9,253.34
Equivalent Annualized Return-on-Investment (If assigned early on day prior to ex-div date): +46.0%
= (+$46.66/$9,253.34) * (365/4 days)

2. Absolute Return-on-Investment (If BAC price is above the $46.50 strike price at the Dec. 13th options expiration date): +1.1%
= +$98.66/$9,253.34
Equivalent Annualized Return-on-Investment (If assigned on the 12/13/2024 options expiration date): +35.4%
= (+$98.66/$9,253.34) * (365/11 days)

2.  Fedex Corporation (FDX) -- New Covered Call Position

The buy/write transaction was:
12/2/2024 Bought 100 Fedex shares @ $296.04.
12/2/2024 Sold 1 FDX 12/13/2024 $290.00 Call option @ $7.94 per share.
Note: Implied Volatility (IV) of the Call options was at 14.7 when this position was transacted which, as I prefer, is above the current VIX of 13.4.   
12/9/2024 Upcoming quarterly ex-dividend of $1.38 per share. 

Two possible overall performance results (including commissions) for this Fedex Corp. Covered Calls position are as follows:
Covered Calls Net Investment: $28,810.67
= ($296.04 - $7.94) * 100 shares + $.67 commission

Net Profit Components:
(a) Options Income: +$793.33
= ($7.94 * 100 shares) - $.67 commission
(b) Dividend Income (If Fedex Call option is exercised early this Friday which is the last business day prior to next Monday's Dec. 9th ex-div date): +$0.00; or
(b) Dividend Income (If Fedex stock assigned at the Dec. 13th, 2024 options expiration): +$138.00
= ($1.38 dividends per share x 100 shares)

(c) Capital Appreciation (If Fedex's Call option is assigned early on Dec. 6th): -$604.00

+($290.00 strike price - $296.04 stock purchase price) * 100 shares; or
(c) Capital Appreciation (If shares assigned at $290.00 strike price at the 12/13/2024 options expiration): -$604.00
+($290.00 - $296.04) * 100 shares

1. Total Net Profit (If option exercised early): +$189.33

= (+$793.33 options income +$0.00 dividend income - $604.00 capital appreciation); or

2. Total Net Profit (If 100 Fedex shares assigned at the $290.00 strike price at the Dec. 13th, 2024 expiration): +$327.33

= (+$793.33 options income +$138.00 dividend income - $604.00 capital appreciation)

1. Potential Absolute Return-on-Investment [If option exercised on business day prior to the 12/9/2024 ex-dividend date]: +0.7%

= +$189.33/$28,810.67

Potential Annualized Return-on-Investment (If option exercised early): +34.3%

= (+$189.33/$28,810.67) * (365/7 days); or

2. Potential Absolute Return-on-Investment (If Fedex's shares assigned on the Dec. 13th options expiration date): +1.1%

= +$327.33/$28,810.67

Potential Annualized Return-on-Investment (If 100 Fedex shares assigned at $290.00 at the Dec. 13th, 2024 expiration): +37.7%

= (+$327.33/$28,810.67) * (365/11 days)

3.  Schlumberger Ltd. (SLB) -- New Covered Calls Position

The buy/write transaction was:
12/2/2024 Bought 400 SLB shares @ $43.22.
12/2/2024 Sold 4 USB 12/13/2024 $42.00 Call options @ $1.48 per share.
12/4/2024 Upcoming quarterly ex-dividend of $.275 per share. 

Two possible overall performance results (including commissions) for this SLB Covered Calls position are as follows:
Covered Calls Net Investment: $16,698.68
= ($43.22 - $1.48) * 400 shares + $2.68 commission

Net Profit Components:
(a) Options Income: +$589.32
= ($1.48 * 400 shares) - $2.68 commission
(b) Dividend Income (In the unlikely event that the SLB Call options exercised early on the last business day prior to this Wednesday's Dec. 4th ex-div date): +$0.00; or
(b) Dividend Income (If SLB stock assigned at the Dec. 13th, 2024 options expiration): +$110.00
= ($.275 dividends per share x 400 shares)

(c) Capital Appreciation (If SLB's Call options assigned early on Dec. 4th): -$488.00

+($42.00 strike price - $43.22 stock purchase price) * 400 shares; or
(c) Capital Appreciation (If shares assigned at $42.00 strike price at the 12/13/2024 options expiration): -$488.00
+($42.00 - $43.22) * 400 shares

1. Total Net Profit [If option exercised early (business day prior to the Dec. 4th ex-dividend date)]: +$101.32

= (+$589.32 options income +$0.00 dividend income - $488.00 capital appreciation); or

2. Total Net Profit (If 400 SLB shares assigned at the $42.00 strike price at the Dec. 13th, 2024 expiration): +$211.32

= (+$589.32 options income + $110.00 dividend income - $488.00 capital appreciation)

1. Potential Absolute Return-on-Investment [If option exercised on business day prior to the 12/4/2024 ex-dividend date]: +0.6%

= +$101.32/$16,698.68

Potential Annualized Return-on-Investment (If option exercised early): +110.7%

= (+$101.32/$16,698.68) * (365/2 days); or

2. Potential Absolute Return-on-Investment (If SLB's shares assigned on the Dec. 13th options expiration date): +1.3%

= +$211.32/$16,698.68

Potential Annualized Return-on-Investment (If 400 SLB shares assigned at $42.00 at the December 13th, 2024 expiration): +42.0%

= (+$211.32/$16,698.68) * (365/11 days)