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)