Early in this morning's trading session, I established a Covered Calls position in Dell Technologies Inc. (ticker DELL) when two hundred shares were purchased at $122.81 and two July 18th, 2025 Call options were sold at $9.35 per share at the $115.00 strike price. So, the corresponding potential time value (aka extrinsic value) profit potential is $1.54 per share = [$9.35 Call options premium - ($122.81 stock purchase price - $115.00 strike price)]. An in-the-money Covered Calls position was established with the probability that the Calls will be in-the-money and thus the stock would be assigned at $115.00 per share on the options expiration date was 76.3% when this position was established.
Dell's next ex-dividend of $.525 per share (1.7% annual dividend yield) goes ex-dividend on July 22nd which is after the current options expiration date. So it is possible that on the July 18th expiration date, I will consider whether or not to apply my Dividend Capture Strategy and continue this Covered Calls position by rolling out my current position to a later expiration date. Also, the next quarterly earnings report is not until August 28th.
This Covered Calls position was preferable to its comparable Cash-Secured Puts position since the extrinsic value (aka time value) for the Calls was higher than that of the comparable Puts.
Dell passed all criteria today in my Value+Quality+Momentum stock screener. The output criteria from this screener are shown on this chart:
As detailed below, a potential return-on-investment result is +1.4% absolute return-on-investment (equivalent to +27.4% annualized
return-on-investment for the next 18 days) if Dell's share price is in-the-money (i.e. above the $115.00 strike price) and the stock is therefore assigned on its July 18th, 2025 options expiration date.
Dell Technologies Inc. (DELL) -- New Covered Calls Position
The net debit buy/write limit order was executed as follows:
6/30/2025 Bought 200 shares of Dell Technologies stock @ $122.81 per share.
6/30/2025 Sold 2 DELL July 18th, 2025 $115.00 Call options @ $9.35 per share. Note: the Implied Volatility of the Calls was 40.3 when this position was established.
A possible overall performance results (including commissions) if the position is in-the-money on the options expiration date is as follows:
Dell Technologies Covered Calls Net Investment: $22,693.34
= ($122.81 - $9.35) * 200 shares + $1.34 commission
Net Profit Components:
(a) Options Income: +$1,868.66
= ($9.35 * 200 shares) - $1.34 commission
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If Dell Technologies stock is above the $115.00 strike price at the July 18th options expiration date): -$1,562.00
= ($115.00 strike price - $122.81 stock purchase price) * 200 shares
Potential Total Net Profit (If in-the-money and therefore assigned at expiration): +$306.66
= (+$1,868.66 options income + $0.00 dividend income - $1,562.00 capital appreciation)
Potential Absolute Return-on-Investment (If stock price is in-the-money and therefore assigned on the 7/18/2025 options expiration date): +1.4% = +$306.66/$22,693.34
Potential Equivalent Annualized-Return-on-Investment: +27.4%
= (+$306.66/$22,693.34) * (365/18 days)
