Established Covered Calls in Nvidia Corporation

This afternoon a Covered Calls position was established in Nvidia Corporation (ticker NVDA).  My net buy/write limit order at $134.08 was executed by simultaneously purchasing three hundred shares at $141.99 and selling three June 27th, 2025 weekly Call options at the $136.00 strike price at $7.91 per share, which provides a $1.92 per share = [$7.91 Call options premium received - ($141.99 stock purchase price - $136.00 options strike price)] time value profit potential.  A moderately in-the-money Covered Calls positions was established with the probability that the stock will close in-the-money on the options expiration date was 71.3%.  As preferred, the next earnings report on August 27th, 2025 is after the June 27th options expiration date. 

Nvidia continues to be the leading AI-focused semiconductor company and their innovations continue.  Nvidia is my top-ranked megacap technology company since their primary customers are other IT behemoths such as Microsoft, Alphabet, Amazon, and Meta, each of whom is continuing with substantial annual increases in their capital expenditure purchases with Nvidia.  Nvidia is the primary revenue beneficiary from the huge expenditures of these megacap brethren.  

So, because of my continuing bullish outlook for Nvidia's potential growth in both revenue and earnings, this position continues my recent practice of establishing short-term in-the-money Covered Calls positions in Nvidia.  Note: I have one other Nvidia Covered Calls position expiring today which will be assigned and another Nvidia CC position that will expire next Friday. I prefer short-term (less than 30 days duration) positions since: (1) the potential annualized return-on-investment is higher for shorter-duration positions; and (2) short-term positions provide us a more frequent opportunity to re-evaluate the existing positions, so we can react quickly if news causes a substantial stock price volatility decline -- whether bullish or bearish. 

 

As detailed below, a potential return-on-investment result is +1.4% absolute return-on-investment (equivalent to +37.2% annualized return-on-investment for the next 14 days) if the Nvidia share price is in-the-money (i.e. above the $136.00 strike price) and therefore assigned on its June 27th, 2025 options expiration date.  

Nvidia Corporation (NVDA) -- New Covered Calls Position

Today's buy/write net limit order transaction was as follows:
6/13/2025 Bought 300 Nvidia Corporation shares at $141.99.

6/13/2025 Sold 3 NVDA 6/27/2025 $136.00 Call options @ $7.91 per share.  The Implied Volatility of these Calls was 37.8% when this position was established.  

A possible overall performance result (including commissions) for this Nvidia Corporation Covered Calls position is as follows:
Covered Calls Net Investment: $40,226.01
= ($141.99 - $7.91) * 300 shares + $2.01 commission

Net Profit:
(a) Options Income: +$2,370.99
= ($7.91 * 300 shares) - $2.01 commission
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If 300 Nvidia shares assigned at the $136.00 strike price at expiration): -$1,797.00
+($136.00 strike price - $141.99 stock purchase price) * 300 shares

Total Net Profit Potential (If 300 Nvidia shares in-the-money and therefore assigned at the $136.00 strike price at the options expiration date): +$573.99
= (+$2,370.99 options income + $0.00 dividend income - $1,797.00 capital appreciation)

Potential Absolute Return-on-Investment: +1.4%
= +$573.99/$40,226.01
Potential Annualized Return-on-Investment: +37.2%
= (+$573.99/$40,226.01) * (365/14 days)