In addition to the $.80 potential time value decay profit at assignment for this position, Merck also goes ex-dividend at $.81 per share (4.1% dividend yield) on June 16th which is prior to the June 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 July 29th, 2025 is after the June 27th options expiration date.
The simultaneous buy/write transaction was as follows:
6/9/2025 Bought 300 shares of Merck & Co. stock @ $79.20 per share.
6/9/2025 Sold 3 MRK June 27th, 2025 $76.00 Call options @ $4.00 per share.
6/16/2025 Upcoming ex-dividend of $.81 per share. The Implied Volatility of these Calls was 28.6 when this transaction was executed.
Two possible overall performance results (including commissions) would be as follows:
Covered Calls Net Investment: $22,562.01
= ($79.20 - $4.00) * 300 shares + $2.01 commission Net Profit Components:
(a) Options Income: +$1,200.00
= ($4.00 * 300 shares)
(b) Dividend Income (If Merck shares assigned on 6/13/2025, the business day prior to the 6/19/2025 ex-dividend date): = +$0.00; or
(b) Dividend Income (If Merck shares assigned at the 6/27/2025 options expiration): +$243.00
= $.81 per share x 300 shares
(c) Capital Appreciation (If MRK shares assigned early on 12/16/2024): -$960.00
= ($76.00 strike price - $79.20 stock purchase price) * 300 shares; or
(c) Capital Appreciation (If MRK shares assigned with stock above the $76.00 strike price at the June 27th options expiration date): -$960.00
= ($76.00 - $79.20) * 300 shares
1. Potential Net Profit (If Merck shares assigned on the June 16th ex-dividend date): +$240.00
= (+$1,200.00 options income + $0.00 dividend income - $960.00 capital appreciation)
2. Potential Net Profit (If MRK price is above $76.00 strike price at the June 27th options expiration): +$483.00
= (+$1,200.00 options income + $243.00 dividend income - $960.00 capital appreciation)
1. Absolute Return-on-Investment (If Merck shares assigned early on the June 16th, 2025 ex-dividend date): +1.1%
= +$240.00/$22,562.01
Equivalent Annualized Return-on-Investment (If assigned early): +55.5%
= (+$240.00/$22,562.01) * (365/7 days)
Merck met all criteria in my Key Metrics stock screener as shown below: 
Two potential return-on-investment results are: (a) +1.1% absolute return-on-investment (equivalent to +55.5% annualized return-on-investment for the next 7 days) if the stock is assigned early this Friday (on June 13th which is the last trading day prior to the June 16th, 2025 ex-dividend date); OR (b) +2.1% absolute return-on-investment (equivalent to +43.4% annualized return-on-investment over the next 18 days) if the stock is assigned on the June 27th, 2025 options expiration date.
Two potential return-on-investment results are: (a) +1.1% absolute return-on-investment (equivalent to +55.5% annualized return-on-investment for the next 7 days) if the stock is assigned early this Friday (on June 13th which is the last trading day prior to the June 16th, 2025 ex-dividend date); OR (b) +2.1% absolute return-on-investment (equivalent to +43.4% annualized return-on-investment over the next 18 days) if the stock is assigned on the June 27th, 2025 options expiration date.
The simultaneous buy/write transaction was as follows:
6/9/2025 Bought 300 shares of Merck & Co. stock @ $79.20 per share.
6/9/2025 Sold 3 MRK June 27th, 2025 $76.00 Call options @ $4.00 per share.
6/16/2025 Upcoming ex-dividend of $.81 per share. The Implied Volatility of these Calls was 28.6 when this transaction was executed.
Two possible overall performance results (including commissions) would be as follows:
Covered Calls Net Investment: $22,562.01
= ($79.20 - $4.00) * 300 shares + $2.01 commission Net Profit Components:
(a) Options Income: +$1,200.00
= ($4.00 * 300 shares)
(b) Dividend Income (If Merck shares assigned on 6/13/2025, the business day prior to the 6/19/2025 ex-dividend date): = +$0.00; or
(b) Dividend Income (If Merck shares assigned at the 6/27/2025 options expiration): +$243.00
= $.81 per share x 300 shares
(c) Capital Appreciation (If MRK shares assigned early on 12/16/2024): -$960.00
= ($76.00 strike price - $79.20 stock purchase price) * 300 shares; or
(c) Capital Appreciation (If MRK shares assigned with stock above the $76.00 strike price at the June 27th options expiration date): -$960.00
= ($76.00 - $79.20) * 300 shares
1. Potential Net Profit (If Merck shares assigned on the June 16th ex-dividend date): +$240.00
= (+$1,200.00 options income + $0.00 dividend income - $960.00 capital appreciation)
2. Potential Net Profit (If MRK price is above $76.00 strike price at the June 27th options expiration): +$483.00
= (+$1,200.00 options income + $243.00 dividend income - $960.00 capital appreciation)
1. Absolute Return-on-Investment (If Merck shares assigned early on the June 16th, 2025 ex-dividend date): +1.1%
= +$240.00/$22,562.01
Equivalent Annualized Return-on-Investment (If assigned early): +55.5%
= (+$240.00/$22,562.01) * (365/7 days)
2. Absolute Return-on-Investment (If Merck price is above the $76.00 strike price at the June 27th options expiration): +2.1%
= +$483.00/$22,562.01
Equivalent Annualized Return-on-Investment (If assigned on the 6/27/2025 options expiration date): +43.4%
= (+$483.00/$22,562.01) * (365/18 days)
At least eight of the nine metrics used in the Covered Calls Advisor's Dividend Capture Strategy spreadsheet must be 'YES' prior to establishing a position. As shown below for this Merck &Co. Inc. position, all nine criteria are met.
