Covered Call Position Established in Amazon.com Inc.

This morning I established a new Covered Call position in Amazon.com Inc. (ticker AMZN) when my buy/write net debit limit order was executed at a price of $212.40.  One hundred shares were purchased at $221.43 and 1 July 18th, 2025 $215.00 Call option was sold at $9.03 per share.  So, the maximum potential time value profit if the stock is in-the-money and therefore closed out by assignment on the options expiration date is $2.60 per share [$9.03 Call option premium - ($221.43 stock purchase price - $215.00 strike price)].  The probability that the Call option will be above the $215.00 strike price on the July 18th options expiration date when this Covered Call position was established was 70.0%.

I have another existing Amazon Covered Call position that will expire today on its options expiration date.  Because of my continuing bullish sentiment regarding Amazon's growth prospects, I decided to establish this new position today with an expiration on July 18th (15 calendar days from today). 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. 

 

Amazon is the leading market cap company in the Consumer Discretionary sector by a very large margin.  JP Morgan's analyst recently noted that Amazon will surpass Walmart this year (for the first time) as #1 in total retail sales in the U.S.  Of course, Amazon also benefits tremendously in the Information Technology sector since its Amazon Web Services (AWS) is the world's #1 cloud computing platform.  

As detailed below, a potential return-on-investment result is +1.2% absolute return-on-investment (equivalent to +29.7% annualized return-on-investment for the next 15 days) if the Amazon.com Inc. share price is in-the-money (i.e. above the $215.00 strike price) and the stock is therefore assigned on its July 18th, 2025 options expiration date. 

Amazon.com Inc. (AMZN) -- New Covered Call Position

The net debit buy/write limit order was executed as follows:
7/3/2025 Bought 100 shares of Amazon.com stock @ $221.43 per share.  
7/3/2025 Sold 1 AMZN July 18th, 2025 $215.00 Call option @ $9.03 per share.  Note: this was a simultaneous Buy/Write transaction and the Implied Volatility of the Call option was 27.7 when this position was established which, as preferred, is well above the current VIX of 16.5.  

Net Profit Components:
(a) Option Income: +$902.33
= ($9.03 * 100 shares) - $.67 commission
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If Amazon.com stock is above the $215.00 strike price at the July 18th, 2025 options expiration date): -$643.00
= ($215.00 strike price - $221.43 stock purchase price) * 100 shares

Total Net Profit Potential (If AMZN is in-the-money and therefore assigned at the $215.00 strike price on its 7/18/2025 options expiration date): +$259.33
= (+$902.33 option income + $0.00 dividend income - $643.00 capital appreciation)

Potential Absolute Return-on-Investment: +1.2%
= +$259.33/$21,240.67
Potential Equivalent Annualized-Return-on-Investment: +29.7%
= (+$259.33/$21,240.67) * (365/15 days)