One of the many appealing features of the Covered Calls investing strategy is that we can easily calculate the potential return-on-investment (roi) results if the stock price were to close on the options expiration date at any possible price. For example, I always make this calculation for the circumstance if the stock were to be in-the-money (i.e. above the Call option's strike price) on its options expiration date. For any option chain that I am considering, this calculation provides me with the maximum potential return-on-investment result for any Covered Calls position I am contemplating establishing, and it does this in advance (i.e. before) I enter the trade. Using Schwab's Think or Swim platform I also look at the real-time probability that any particular Call option chain I'm evaluating will be assigned (i.e. close in-the-money) on its options expiration date. Knowing both the risk (probability %) and reward (return-on-investment) for any specific Covered Calls position just prior to making a Covered Calls investment is invaluable for making decisions that are consistent with my personal risk tolerance profile.
Furthermore, since Covered Calls and 100% Cash-Secured Puts are synthetically equivalent strategies, just prior to entering the trade order, we should also evaluate whether a Covered Calls or a Cash-Secured Puts order would be preferable. This is easily done by comparing the time value (i.e. extrinsic value) of the comparable Calls or Puts position to determine which one has a higher value and therefore a higher potential return-on-investment. In recent history, Calls have normally had the higher time value which is why I almost always choose to enter Covered Calls orders (even when the circumstance occurs that the time value between comparable Calls and Puts are basically equal).
The Covered Calls Advisor Portfolio had two Covered Calls positions with June 6th, 2025 weekly options expirations. Both positions closed on this options expiration date yesterday with their stock prices well in-the-money (i.e. above the strike price), so the Calls expired with no remaining value and the Covered Calls were closed out with the stocks sold at their respective strike prices; and their maximum potential return-on-investment results on the options expiration date were achieved. A summary of the return-on-investment results for these positions are as follows:
1. T-Mobile US Inc. (TMUS) -- +1.4% absolute return-on-investment (equivalent to +30.8% annualized return-on-investment) for the 16 days of this investment. This T-Mobile position had a $232.50 strike price and it closed at $245.86 yesterday. The blog post showing the details of this position on the day the position was originally established is here.
2. UnitedHealth Group Inc. (UNH) -- +2.5% absolute return-on-investment (equivalent to +64.1% annualized return-on-investment) for the 14 days of this investment. This UnitedHealth Group position had a $280.00 strike price and it closed yesterday at $303.22. The blog post showing the details of this position on the day the position was originally established is here.
To read some of my prior posts related to my decision-making processes for Covered Calls investing, click on the "Covered Calls Processes" link shown in the "Categories" section in the right sidebar of the homepage (which is here). One posted article there that readers have found especially helpful and that you might begin with titled "Exploiting Our Covered Calls Investing "Edges"' is here.
As always, I encourage you to email any of your comments or questions related to the Covered Calls investing strategy to the email address shown below.
Jeff Partlow
The Covered Calls Advisor
partlow@cox.net
