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):