Established Covered Calls in Nvidia Corporation

This morning at 10:14am ET, a short-term Covered Calls position was established in Nvidia Corporation (ticker NVDA).  My net buy/write limit order at $170.56 was executed by simultaneously purchasing two hundred shares at $177.17 and selling two September 19th, 2025 Call options at the $172.50 strike price at $6.61 per share, which provides a $1.94 per share = [$6.61 Call options premium received - ($177.17 stock purchase price - $172.50 options strike price)] time value profit potential.  This $1.94 time value in the Calls exceeded (by $.19 per share) the $1.75 time value available from the comparable Puts which justifies establishing a higher potential return-on-investment Covered Calls position instead of its comparable Cash-Secured Puts position.  A moderately in-the-money Covered Calls position was established with the probability that the stock will close in-the-money on the options expiration date being at 70.2%.  As preferred, the next earnings report on November 19th, 2025 is after the September 19th 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, Meta, and Oracle 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 technology 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. 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 -- whether bullish or bearish. 

 

As detailed below, a potential return-on-investment result is +1.1% absolute return-on-investment (equivalent to +51.7% annualized return-on-investment for the next 8 days) if the Nvidia share price is in-the-money (i.e. above the $172.50 strike price) and therefore assigned on its Sept 19th, 2025 options expiration date.  

Nvidia Corporation (NVDA) -- New Covered Calls Position

Today's buy/write net limit order transaction was as follows:
9/11/2025 Bought 200 Nvidia Corporation shares at $177.17.

9/11/2025 Sold 2 NVDA 9/19/2025 $172.50 Call options @ $6.61 per share.  The Implied Volatility of these Calls was 36.0% 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: $34,113.34
= ($177.17 - $6.61) * 200 shares + $1.34 commission

Net Profit:
(a) Options Income: +$1,320.66
= ($6.61 * 200 shares) - $1.34 commission
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If 200 Nvidia shares assigned at the $172.50 strike price at expiration): -$934.00
+($172.50 strike price - $177.17 stock purchase price) * 200 shares

Total Net Profit Potential (If 200 Nvidia shares in-the-money and therefore assigned at the $172.50 strike price at the options expiration date): +$386.66
= (+$1,320.66 options income + $0.00 dividend income - $934.00 capital appreciation)

Potential Absolute Return-on-Investment: +1.1%
= +$386.66/$34,113.34
Potential Annualized Return-on-Investment: +51.7%
= (+$386.66/$34,113.34) * (365/8 days)