Covered Call Position Established in AppLovin Corporation

This morning I established a new Covered Call position in AppLovin Corporation (ticker APP) when my buy/write net debit limit order was executed at a price of $321.40.  One hundred shares were purchased at $362.10 and 1 in-the-money August 8th, 2025 $345.00 Call option was sold at $40.70 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 $23.60 per share [$40.70 Call option premium - ($362.10 stock purchase price - $345.00 strike price)].  The probability that the Call option will be above the $345.00 strike price on the August 8th options expiration date when this Covered Call position was established was 54.4%.

AppLovin is a $123 billion market cap leading global provider of a full-stack AI/Machine Learning powered software platform for advertisers to monetize their mobile advertising applications content.  They also had a mobile gaming business which they divested themselves of just last month to focus solely on their more rapidly growing ad-tech business.  In fact, they are so successful with their ads that they are currently supply constrained in the number of new customers they can add to their platform.  But to address this problem, they have just released the initial version of a self-serve ads-management dashboard that will be a catalyst to substantially enhance the rate at which they can add new customers which will further stimulate their revenue growth and also their already robust GAAP profit margins.  Their visionary CEO is Adam Foroughi who was one of the co-founders of the company in 2012.  Their IPO was in 2021.  They employ highly educated machine learning research scientists with graduate degrees from top-rated universities.  

As detailed below, a potential return-on-investment result is +7.3% absolute return-on-investment (equivalent to +148.9% annualized return-on-investment for the next 18 days) if the AppLovin share price is in-the-money (i.e. above the $345.00 strike price) and the stock is therefore assigned on its August 8th, 2025 options expiration date. 

AppLovin Corporation (APP) -- New Covered Call Position

The net debit buy/write limit order was executed as follows:
7/21/2025 Bought 100 shares of AppLovin Corp. stock @ $362.10 per share.  
7/21/2025 Sold 1 APP August 8th, 2025 $345.00 Call option @ $40.70 per share.
Note: this was a simultaneous Buy/Write transaction and the Implied Volatility of the Call was an incredibly high 98.9 when this position was established.  Their next earnings report is on August 6th.  I normally avoid holding Covered Call positions with intervening earnings reports before the options expiration date because of the stock price volatility that occurs when the earnings are released.  But given the extremely high Implied Volatility, I believe the risk/reward is attractive in this case; and I can always decide to exit the position completely prior to August 6th if I believe conditions at that time warrant action.   

A possible overall performance result (including commissions) if this position is assigned on its 8/8/2025 options expiration date is as follows:
AppLovin Covered Call Net Investment: $32,140.67
= ($362.10 - $40.70) * 100 shares + $.67 commission

Net Profit Components:
(a) Option Income: +$4,069.33
= ($40.70 * 100 shares) - $.67 commission
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If AppLovin stock is above the $345.00 strike price at the August 8th, 2025 options expiration date): -$1,710.00
= ($345.00 strike price - $362.10 stock purchase price) * 100 shares

Total Net Profit Potential (If APP is in-the-money and therefore assigned at the $345.00 strike price on its 8/8/2025 options expiration date): +$2,359.33
= (+$4,069.33 option income + $0.00 dividend income - $1,710.00 capital appreciation)

Potential Absolute Return-on-Investment: +7.3%
= +$2,359.33/$32,140.67
Potential Equivalent Annualized-Return-on-Investment: +148.9%
= (+$2,359.33/$32,140.67) * (365/18 days)