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Friday, October 17, 2025

Established Covered Calls in NVIDIA Corporation

This morning a two-week Covered Calls position was established in NVIDIA Corporation (ticker NVDA).  My net buy/write limit order at $168.88 was executed by simultaneously purchasing two hundred shares at $181.53 and selling two October 31st, 2025 weekly Call options at the $172.50 strike price at $12.65 per share, which provides a $3.62 per share = [$12.65 Call options premium received - ($181.53 stock purchase price - $172.50 options strike price)] time value profit potential.  This is the second NVIDIA Covered Calls position in my current portfolio; the first position (also at the $172.50 strike price) has an expiration date next Friday (7 calendar days from today).  A moderately in-the-money Covered Calls positions was established for my new position with the probability that NVIDIA's stock will close in-the-money on the options expiration date was 68.7%.  As preferred, the next earnings report on November 19th, 2025 is after the October 31st options expiration date. 

As detailed below, a potential return-on-investment result is +2.1% absolute return-on-investment (equivalent to +55.8% annualized return-on-investment for the next 14 days) if NVIDIA's share price is in-the-money (i.e. above the $172.50 strike price) and therefore assigned on its October 31st, 2025 options expiration date.  

NVIDIA Corporation (NVDA) -- New Covered Calls Position

Today's buy/write net limit order transaction was as follows:
10/17/2025 Bought 200 NVIDIA Corporation shares at $181.53.
10/17/2025 Sold 2 NVIDIA 10/31/2025 $172.50 Call options @ $12.65 per share.  The Implied Volatility of these Calls was 50.7% 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: $33,777.34
= ($181.53 - $12.65) * 200 shares + $1.34 commission

Net Profit:
(a) Options Income: +$2,528.66
= ($12.65 * 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): -$1,806.00
+($172.50 strike price - $181.53 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): +$722.66
= (+$2,528.66 options income + $0.00 dividend income - $1,806.00 capital appreciation)

Potential Absolute Return-on-Investment: +2.1%
= +$722.66/$33,777.34
Potential Annualized Return-on-Investment: +55.8%
= (+$722.66/$33,777.34) * (365/14 days)