Established Covered Calls in Merck & Co. Inc.

This afternoon a Covered Calls position was established in Merck & Co. Inc. (ticker MRK) with the purchase of 300 shares at $79.20 per share and three June 27th, 2025 weekly Call options were sold for $4.00 per share at the $76.00 strike price.  A moderately in-the-money Covered Calls positions was established with the probability that the Calls will expire in-the-money on the 6/27/2025 options expiration date was 73.2%.  

In addition to the $.80 potential time value decay profit at assignment for this position, Merck also goes ex-dividend at $.81 per share (4.1% dividend yield) on June 16th which is prior to the June 27th options expiration date -- so this dividend is included in the potential return-on-investment results detailed below.  As I prefer, the next quarterly earnings report on July 29th, 2025 is after the June 27th options expiration date.

Merck met all criteria in my Key Metrics stock screener as shown below: 

 
Two potential return-on-investment results are: (a) +1.1% absolute return-on-investment (equivalent to +55.5% annualized return-on-investment for the next 7 days) if the stock is assigned early this Friday (on June 13th which is the last trading day prior to the June 16th, 2025 ex-dividend date); OR (b) +2.1% absolute return-on-investment (equivalent to +43.4% annualized return-on-investment over the next 18 days) if the stock is assigned on the June 27th, 2025 options expiration date. 

Merck & Co. Inc. (MRK) -- New Covered Calls Position
The simultaneous buy/write transaction was as follows:
6/9/2025 Bought 300 shares of Merck & Co. stock @ $79.20 per share.  
6/9/2025 Sold 3 MRK June 27th, 2025 $76.00 Call options @ $4.00 per share.
6/16/2025 Upcoming ex-dividend of $.81 per share.  The Implied Volatility of these Calls was 28.6 when this transaction was executed.

Two possible overall performance results (including commissions) would be as follows:
Covered Calls Net Investment: $22,562.01
= ($79.20 - $4.00) * 300 shares + $2.01 commission

Net Profit Components:
(a) Options Income: +$1,200.00
= ($4.00 * 300 shares)
(b) Dividend Income (If Merck shares assigned on 6/13/2025, the business day prior to the 6/19/2025 ex-dividend date): = +$0.00; or
(b) Dividend Income (If Merck shares assigned at the 6/27/2025 options expiration): +$243.00
= $.81 per share x 300 shares
(c) Capital Appreciation (If MRK shares assigned early on 12/16/2024): -$960.00
= ($76.00 strike price - $79.20 stock purchase price) * 300 shares; or
(c) Capital Appreciation (If MRK shares assigned with stock above the $76.00 strike price at the June 27th options expiration date): -$960.00
= ($76.00 - $79.20) * 300 shares

1. Potential Net Profit (If Merck shares assigned on the June 16th ex-dividend date): +$240.00
= (+$1,200.00 options income + $0.00 dividend income - $960.00 capital appreciation)
2. Potential Net Profit (If MRK price is above $76.00 strike price at the June 27th options expiration): +$483.00
= (+$1,200.00 options income + $243.00 dividend income - $960.00 capital appreciation)

1. Absolute Return-on-Investment (If Merck shares assigned early on the June 16th, 2025 ex-dividend date): +1.1%
= +$240.00/$22,562.01
Equivalent Annualized Return-on-Investment (If assigned early): +55.5%
= (+$240.00/$22,562.01) * (365/7 days)

2. Absolute Return-on-Investment (If Merck price is above the $76.00 strike price at the June 27th options expiration): +2.1%
= +$483.00/$22,562.01
Equivalent Annualized Return-on-Investment (If assigned on the 6/27/2025 options expiration date): +43.4%
= (+$483.00/$22,562.01) * (365/18 days)

At least eight of the nine metrics used in the Covered Calls Advisor's Dividend Capture Strategy spreadsheet must be 'YES' prior to establishing a position.  As shown below for this Merck &Co. Inc. position, all nine criteria are met.

Established Covered Call Position in UnitedHealth Group Inc.

Last Friday on its options expiration date, my Covered Call in UnitedHealth Group closed in-the-money so the maximum profit potential from this position was achieved.  Since UNH has an upcoming ex-dividend of $2.21 on June 16th, 2025 and since it met the criteria of my dividend capture strategy, I decided to establish a new Covered Call position in UnitedHealth Group Inc. (ticker UNH).  

Early in this morning's trading session, one hundred shares were purchased at $303.76 and one June 27th, 2025 Call option was sold at the $290.00 strike price at $16.87 per share--a buy/write net debit transaction of $286.89 per share which provides a maximum $3.11 per share time value profit potential.  The probability of the Call being in-the-money on the options expiration date was 74.1% when this transaction occurred. The upcoming dividend is $2.21 per share (2.9% annual dividend yield) on June 16th which is prior to the June 27th options expiration date, so this dividend is included in the potential return-on-investment results shown below.  Fortunately, there is no UNH quarterly earnings report prior to the 6/27/2025 options expiration date. 

Two potential return-on-investment results for this UnitedHealth Group Inc. Covered Call position are as follows: (a) +1.1% absolute return-on-investment (equivalent to +56.4% annualized return-on-investment) for the next 7 days if the stock is assigned early on the last business day prior to the June 16th ex-dividend date; or (b) +1.9% absolute return-on-investment (equivalent to +37.6% annualized return-on-investment) for the next 18 days if the stock is instead assigned on its June 27th, 2025 options expiration date.

 
UnitedHealth Group Inc. (UNH) -- New Covered Call Position 

The Buy/Write transaction was as follows:
6/9/2025 Bought 100 shares of UnitedHealth Group @ $303.76 per share.  
6/9/2025 Sold 1 UNH June 27th, 2025 $290.00 Call option @ $16.87 per share.  The Implied Volatility of the Calls was 31.0 when this position was established.

6/16/2025 Upcoming ex-dividend of $2.21 per share.  

Two possible overall performance results (including commissions) for this UnitedHealth Group Covered Call position are as follows: 

Covered Call Net Investment: $28,689.67

= ($303.76 - $16.87) * 100 shares + $.67 commission

Net Profit Components:
(a) Option Income: +$1,686.33
= ($16.87 * 100 shares) - $.67 commission
(b) Dividend Income: $221.00

= ($2.21 per share x 100 shares)
(c) Capital Appreciation (If shares assigned at $290.00 strike price at the 6/27/2025 options expiration date): -$1,376.00
+($290.00 strike price - $303.76 stock purchase price) * 100 shares

1. Total Net Profit [If stock shares assigned at $290.00 strike price this Friday (the last business day prior to the June 16th ex-dividend date)]: +$310.33

= (+$1,686.33 options income + $0.00 dividend income - $1,376.00 capital appreciation); or

2. Total Net Profit (If stock shares assigned at $290.00 strike price at the 6/27/2025 options expiration date): +$531.33

= (+$1,686.33 option income + $221.00 dividend income - $1,376.00 capital appreciation)

1. Potential Absolute Return-on-Investment (if assigned early on the last trading day prior to the 6/16/2025 ex-dividend): +1.1%

= +$310.33/$28,689.67

Potential Annualized Return-on-Investment: +56.4%

= (+$310.33/$28,689.67) * (365/7 days); or

2. Potential Absolute Return-on-Investment (if assigned on the 6/27/2025 options expiration date): +1.9%

= +$531.33/$28,689.67

Potential Annualized Return-on-Investment: +37.6%

= (+$531.33/$28,689.67) * (365/18 days)

June 6th, 2025 Weekly Options Expiration Results

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

Established Covered Calls Position in Pulte Group Inc.

A short-term buy/write limit order in Pulte Group Inc. (ticker PHM) was executed this afternoon at the Covered Calls Advisor's net debit price of $95.75 per share. Two hundred shares were purchased at $100.60 and two June 20th, 2025 Call options were sold for $4.85 per share at the $97.00 strike price, a time value profit potential of $1.25 = [$4.85 options premium - ($100.60 stock price - $97.00 strike price)] per share.  This position is in-the-money since the probability that the position will be in-the-money on its June 20th options expiration date was 70.4% when this transaction was executed today.  The probability that this position will expire in-the-money on the 6/20/2025 options expiration date was 70.4% when this position was established.  Also, the next quarterly earnings report on July 22nd, 2025 is after this month's June 20th options expiration date.  

This position uses the Covered Calls Advisor's Dividend Capture Strategy (see here).  Pulte has an upcoming quarterly ex-dividend of $.22 per share that goes ex-dividend on June 17th, 2025 which is prior to the June 20th, 2025 options expiration date.  This dividend increases the potential annualized return-on-investment results (compared with a similar position without a dividend capture potential) and the dividend is included in the detailed potential return-on-investment calculations shown below.  Either an early assignment on the last business day prior to the ex-dividend date or on the June 20th, 2025 options expiration date would be a desirable result given the annualized return-on-investment potential upon assignment for either outcome. 

As shown in my S&P 500 Price Potential stock screener results below, Pulte Group achieves every criteria.  

As detailed below, two potential return-on-investment results are: 

•  +1.3% absolute return (equivalent to +43.1% annualized return-on-investment for the next 11 days) if the stock is assigned early (the last business day prior to the June 17th ex-dividend date); OR 

• +1.5% absolute return (equivalent to +38.4% annualized return over the next 14 days) if the stock is assigned on the June 20th, 2025 options expiration date.

Pulte Group Inc. (PHM) -- New Covered Calls Position
The simultaneous buy/write transaction was:
6/6/2025 Bought 200 Pulte Group Inc. shares @ $100.60.
6/6/2025 Sold 2 Pulte 6/20/2025 $97.00 Call options @ $4.85 per share.
Note: the Implied Volatility of the Call options was 33.6 when this position was established.
6/17/2025 Upcoming quarterly ex-dividend of $.22 per share.

Two possible overall performance results (including commissions) for this Pulte Group Covered Calls position are as follows:
Covered Calls Cost Basis: $19,151.34
= ($100.60 - $4.85) * 200 shares + $1.34 commission

Net Profit Components:
(a) Options Income: +$968.66
= ($4.85 * 200 shares) - $1.34 commission
(b) Dividend Income (If options exercised early on June 16th, the last business day prior to the June 17th, 2025 ex-div date): +$0.00; or
(b) Dividend Income (If Pulte stock assigned on the June 20th, 2025 options expiration -- so the dividend is captured): +$44.00
= ($.22 dividend per share x 200 shares)

(c) Capital Appreciation (If Pulte Call options assigned early on June 17th): -$720.00
+($97.00 - $100.60) * 200 shares; or
(c) Capital Appreciation (If shares assigned at $97.00 strike price at options expiration): -$720.00
+($97.00 - $100.60) * 200 shares

1. Total Net Profit (If options exercised early): +$248.66

= (+$968.66 options income + $0.00 dividend income - $720.00 capital appreciation); or

2. Total Net Profit (If Pulte shares assigned at $97.00 at the June 20th, 2025 expiration): +$292.66

= (+$968.66 options income + $44.00 dividend income - $720.00 capital appreciation)

1. Absolute Return-on-Investment [If option exercised on business day prior to the June 17th ex-dividend date]: +1.3%

= +$248.66/$19,151.34

Annualized Return-on-Investment (If option exercised early): +43.1%

= (+$248.66/$19,151.34) * (365/11 days); or

2. Absolute Return-on-Investment (If Pulte shares assigned on the June 20th, 2025 options expiration date): +1.5%

= +$292.66/$19,849.34

Annualized Return-on-Investment (If Pulte shares assigned at $97.00 at the June 20th, 2025 expiration): +38.4%

= (+$292.66/$19,849.34) * (365/14 days)

Either outcome would provide a good return-on-investment result for this Pulte Group Covered Calls investment.  These returns will be achieved as long as the stock is above the $97.00 strike price at assignment.  However, if the stock declines below the strike price, a breakeven price of $95.53 = ($100.60 stock price - $4.85 Call options price - $.22 dividend) provides 5.0% downside protection below today's stock purchase price.

At least eight of the nine metrics used in the Covered Calls Advisor's Dividend Capture Strategy spreadsheet must be 'YES' prior to establishing a position.  As shown below with this Pulte Group position, all nine criteria are met.

Early Assignment of Covered Calls Position in Bank of America Corporation

I was notified by Schwab via email early this morning that the five Bank of America Corporation (ticker BAC) June 13th, 2025 Call options were exercised yesterday.  BofA's stock price increased slightly from $43.88 when this position was established to $44.12 at yesterday's market close, the original $.24 time value in the Calls when the position was established had declined on yesterday's market closer to $0.00.  So, with seven days remaining until the June 13th options expiration date, the owner of these Calls exercised their option to buy the 500 shares at the $42.50 strike price in order to receive today's $.26 per share ex-dividend.  Although I will not receive the ex-dividend, I am pleased with the +33.7% annualized-return-on-investment (aroi) result achieved since it slightly exceeds the maximum aroi that might have been achieved if this position instead remained in-the-money and would therefore be assigned on next Friday's (June 13th, 2025) options expiration date.   

The post when this Bank of America Corp. Covered Calls position was originally established is here.  As detailed below, the return-on-investment result for this Bank of America Covered Calls position was +0.6% absolute return in 7 days (equivalent to a +33.7% annualized return-on-investment).

Bank of America Corporation (BAC) -- Covered Calls Position Closed by Early Assignment

The buy/write transaction was as follows:
5/30/2025 Bought 500 shares of Bank of America Corp. stock @ $43.88 per share 
5/30/2025 Sold 5 BAC June 13th, 2025 $42.50 Call options @ $1.66 per share
Note: The Implied Volatility of these Calls was 23.3 when this position was established.
6/6/2023 Five Bank of America Calls were exercised on the last business day prior to their June 6th, 2025 ex-dividend date, so the Call options expired and the 500 Bank of America shares were sold at the $42.50 strike price.

The overall performance results (including commissions) are as follows:
Covered Calls Cost Basis: $21,113.35
= ($43.88 - $1.66) * 500 shares + $3.35 commission

Net Profit Components:
(a) Options Income: +$826.65
= ($1.66 * 500 shares) - $3.35 commission
(b) Dividend Income (500 shares assigned on 6/5/2025, the last business day prior to the 6/6/2025 ex-dividend date): = +$0.00
(c) Capital Appreciation (BAC shares assigned early on 6/5/2025): -$690.00
= ($42.50 strike price - $43.88 stock purchase price) * 500 shares

Net Profit (Bank of America shares assigned on 6/5/2025, the day prior to the June 6th ex-dividend date): +$136.65
= (+$826.65 options income + $0.00 dividend income - $690.00 capital appreciation)

Absolute Return-on-Investment: +0.6%
= +$136.65/$21,113.35
Annualized Return-on-Investment: +33.7%
= (+$136.65/$21,113.35) * (365/7 days)

Early Assignment of Covered Call Position in Home Depot Inc.

I was notified by Schwab via email early this morning that the one Home Depot Inc. (ticker HD) June 13th, 2025 Call option was exercised yesterday.  Despite the fact that the stock price has increased only very slightly (from $369.71 purchase price to $370.10 at yesterday's market close), the original Call option time value has decreased from the original $3.50 time value in the Call option when the position was established to only about $.25 at yesterday's market close.  So, with eight days remaining until the June 13th options expiration date, the owner of this Call exercised their option to buy the 100 shares at the $362.50 strike price in order to receive today's $2.30 per share ex-dividend.  Although I will not receive the ex-dividend, I am pleased with the +44.4% annualized-return-on-investment (aroi) result achieved since it exceeds the maximum +36.8% aroi that might have been achieved if this position instead remained in-the-money and would therefore be assigned on its June 13th, 2025 options expiration date.   

The post when this Home Depot Inc. Covered Call position was originally established is here.  As detailed below, the return-on-investment result for this Home Depot Covered Call position was +1.0% absolute return in 8 days (equivalent to a +44.4% annualized return-on-investment).

Home Depot Inc. (C) -- Covered Call Position Closed by Early Assignment

The simultaneous buy/write transaction was:
4/16/2025 Bought 100 Home Depot Inc. shares @ $369.71.
4/16/2025 Sold 1 Home Depot 6/13/2025 $362.50 Call option @ $10.71 per share.
6/5/2025 One Home Depot Call was exercised on the last business day prior to its June 5th, 2025 ex-dividend date, so the Call expired and the 100 Home Depot shares were sold at the $362.50 strike price.

The overall performance result (including commissions) for this Home Depot Covered Call position is as follows:
Covered Calls Cost Basis: $35,900.67
= ($369.71 - $10.71) * 100 shares + $.67 commission

Net Profit Components:
(a) Option Income: +$1,070.33
= ($10.71 * 100 shares) - $.67 commission
(b) Dividend Income (HD Call option exercised early on June 4th, 2025, the business day prior to the June 5th ex-div date): +$0.00

(c) Capital Appreciation (Early Assignment): -$721.00
+($362.50 strike price - $369.71 stock purchase price) * 100 shares

Total Net Profit: +$349.33

= (+$1,070.33 option income + $0.00 dividend income - $721.00 capital appreciation)

Absolute Return-on-Investment: +1.0%

= +$349.33/$35,900.67

Annualized Return-on-Investment: +44.4%

= (+$349.33/$35,900.67) * (365/8 days)

Established Covered Calls in Nvidia Corporation

Today a Covered Calls position was established in Nvidia Corporation (ticker NVDA).  This morning I established a net buy/write limit order at $131.88 by purchasing three hundred shares at $140.23 and selling three June 20th, 2025 monthly Call options at the $134.00 strike price at $8.35 per share, which provides a $2.12 per share = [$8.35 Call options premium received - ($140.23 stock purchase price - $134.00 options strike price)] time value profit potential.  A moderately in-the-money Covered Calls positions was established with the probability that the stock will close in-the-money on the options expiration date was 71.0%.  As preferred, the next earnings report on August 27th, 2025 is after the June 13th options expiration date. 

Nvidia continues to be the leading AI-focused semiconductor company and their innovations continue.  For example, just this past month they announced a new product category, the DGX Spark AI-based workstation for software developers and data scientists that will incorporate their newest Blackwell chip technology.  Nvidia is my top-ranked megacap technology company since their primary customers are other IT behemoths such as Microsoft, Alphabet, and Meta, each of whom is continuing with substantial annual increases in their capital expenditure purchases with Nvidia.  Think about it -- Nvidia is the primary revenue beneficiary from the huge expenditures of several of its tech megacap 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.  Note: I have another existing Nvidia Covered Calls position at the $133.00 strike price with a 6/13/2025 expiration date. 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. 

 

As detailed below, a potential return-on-investment result is +1.6% absolute return-on-investment (equivalent to +36.6% annualized return-on-investment for the next 16 days) if the Nvidia share price is in-the-money (i.e. above the $134.00 strike price) and therefore assigned on its June 20th, 2025 options expiration date.  

Nvidia Corporation (NVDA) -- New Covered Calls Position

Today's buy/write net limit order transaction was as follows:
6/4/2025 Bought 300 Nvidia Corporation shares at $140.23.

6/4/2025 Sold 3 NVDA 6/20/2025 $134.00 Call options @ $8.35 per share.  The Implied Volatility of these Calls was 38.5% 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: $39,566.01
= ($140.23 - $8.35) * 300 shares + $2.01 commission

Net Profit:
(a) Options Income: +$2,502.99
= ($8.35 * 300 shares) - $2.01 commission
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If 300 Nvidia shares assigned at the $134.00 strike price at expiration): -$1,869.00
+($134.00 strike price - $140.23 stock purchase price) * 300 shares

Total Net Profit Potential (If 300 Nvidia shares in-the-money and therefore assigned at the $134.00 strike price at the options expiration date): +$633.99
= (+$2,502.99 options income + $0.00 dividend income - $1,869.00 capital appreciation)

Potential Absolute Return-on-Investment: +1.6%
= +$633.99/$39,566.01
Potential Annualized Return-on-Investment: +36.6%
= (+$633.99/$39,566.01) * (365/16 days)

Covered Call Position Established in Amazon.com Inc.

Today my short-term buy/write net debit limit order was executed at a price of $198.20 when 100 shares of Amazon.com Inc. (ticker symbol AMZN) stock were purchased at $206.84 and 1 June 13th, 2025 $200.00 Call option was sold at $8.64 per share.  So, the potential time value profit if the stock is in-the-money and therefore closed out by assignment on the options expiration date is $1.80 per share [$8.64 Call option premium - ($206.84 stock purchase price - $200.00 strike price)].  The probability that the Call option will be above the $200.00 strike price on the June 13th options expiration date when this Covered Call position was established was 74.3%.

Amazon is the leading company in the Consumer Discretionary sector that in Technology is also the world's #1 cloud computing platform.  There are 52 Wall Street analysts that cover it and their average target price is $239.52 (+15.8% above today's stock purchase price).   The London Stock Exchange Group rates it as an 8 for their Average Score and 9 for Optimized Score (on a scale of 1 to 10).   As shown in the table below, Amazon also passed every criteria in my Quality+Value+Growth+Momentum stock screener:

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

The net debit buy/write limit order was executed as follows:
6/3/2025 Bought 100 shares of Amazon.com stock @ $206.84 per share.  
6/3/2025 Sold 1 AMZN June 13th, 2025 $200.00 Call option @ $8.64 per share.
Note: this was a simultaneous Buy/Write transaction and the Implied Volatility of the Call was 31.0 when this position was established which, as preferred, is well above the current VIX of 17.8.  

A possible overall performance result (including commissions) if this position is assigned on its 6/13/2025 options expiration date is as follows:
Amazon.com Covered Call Net Investment: $19,820.67
= ($206.84 - $8.64) * 100 shares + $.67 commission

Net Profit Components:
(a) Options Income: +$863.33
= ($8.64 * 100 shares) - $.67 commission
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If Amazon.com stock is above the $200.00 strike price at the June 13th, 2025 options expiration date): -$684.00
= ($200.00 strike price - $206.84 stock purchase price) * 100 shares

Total Net Profit Potential (If AMZN is in-the-money and therefore assigned at the $200.00 strike price on its 6/13/2025 options expiration date): +$179.33
= (+$863.33 options income + $0.00 dividend income - $684.00 capital appreciation)

Potential Absolute Return-on-Investment: +0.9%
= +$179.33/$19,820.67
Potential Equivalent Annualized-Return-on-Investment: +33.0%
= (+$179.33/$19,820.67) * (365/10 days)  

Covered Calls Established in Bank of America Corporation

Early this afternoon, a Covered Calls position was established in Bank of America Corp. (ticker BAC) with the purchase of 500 shares at $43.88 per share and five June 13th, 2025 Call options were sold for $1.66 per share at the $42.50 strike price.  This Bank of America transaction occurred via a simultaneous buy/write transaction at my net debit limit order price of $42.22 per share.  The corresponding time value (aka extrinsic value) in the Call options was $.28 per share = [$1.66 Call options premium received - ($43.88 stock purchase price - $42.50 options strike price)].  A moderately in-the-money Covered Calls positions was established with the probability that the stock will close in-the-money on the options expiration date was 75.3%.  As preferred, the next earnings report on July 16th, 2025 is after the June 13th options expiration date. 

Bank of America goes ex-dividend at $.26 per share (2.4% annualized dividend yield at the current stock price) on June 6th, 2025 which is prior to the June 13th options expiration date, so this dividend is included in the potential return-on-investment results shown below.  As shown below, all nine criteria in the Covered Calls Advisor's Dividend Capture Strategy spreadsheet were met for this position.  

Most companies in the Financial Sector provide only modest growth prospects, but they often provide good annual dividend yields.  Consequently, the Covered Calls Advisor targets opportunities to use the Dividend Capture Strategy in all Financial Sector Covered Calls positions.  This new June 13th, 2025 Bank of America Covered Calls position continues the Dividend Capture Strategy of often selling in-the-money monthly Covered Calls for one of six megacap U.S. banks (Bank of America, Citigroup, JPMorgan Chase, Goldman Sachs, Morgan Stanley, and Wells Fargo) for each options expiration month:
(JPMorgan Chase quarterly for Jan, Apr, July, and Oct options expirations;
Citigroup, Morgan Stanley, and/or Wells Fargo for Feb, May, Aug, and Nov options expirations; and Bank of America and/or Goldman Sachs for Mar, Jun, Sep, and Dec options expirations). 

The goal of these monthly Covered Calls in these banks is to both provide an opportunity to either: (1) potentially capture the quarterly dividend payment and if the stock price remains above the strike price at options expiration, the maximum possible return-on-investment result on the options expiration date for the position would be achieved; or (2) have the stock assigned early on the day prior to the ex-dividend date in which case the annualized return-on-investment for early assignment is often greater than that of an assignment on the options expiration date (which is true for this BAC Covered Calls position).  So far, applying this approach has provided attractive annualized return results -- significantly better than would be achieved if Covered Calls positions for these bank stocks were held in the Covered Calls Advisor Portfolio in the other two non-dividend paying months each quarter.  

Two potential return-on-investment results for this Bank of America Covered Calls position are: (a) +0.6% absolute return-on-investment (equivalent to +33.7% annualized return-on-investment for the next 7 days) in the event that the stock is assigned early [i.e. on June 5th which is the last trading day prior to the June 6th ex-dividend date]; OR (b) +1.3% absolute return-on-investment (equivalent to +32.9% annualized return-on-investment over the next 14 days) if the stock is assigned on the June 13th, 2025 options expiration date. 

Bank of America Corporation (BAC) -- New Covered Calls Position

The buy/write transaction was as follows:
5/30/2025 Bought 500 shares of Bank of America Corp. stock @ $43.88 per share 
5/30/2025 Sold 5 BAC June 13th, 2025 $42.50 Call options @ $1.66 per share
Note: The Implied Volatility of these Calls was 23.3 when this position was established.
6/6/2023 Upcoming ex-dividend of $.26 per share

Two possible overall performance results (including commissions) would be as follows:
Covered Calls Cost Basis: $21,113.35
= ($43.88 - $1.66) * 500 shares + $3.35 commission

Net Profit Components:
(a) Options Income: +$826.65
= ($1.66 * 500 shares) - $3.35 commission
(b) Dividend Income (If BAC shares assigned on 6/5/2025, the last business day prior to the 6/6/2025 ex-dividend date): = +$0.00; or
(b) Dividend Income (If BAC shares assigned at the 6/13/2025 options expiration): +$130.00
= $.26 per share x 500 shares
(c) Capital Appreciation (If BAC shares assigned early on 6/5/2025): -$690.00
= ($42.50 strike price - $43.88 stock purchase price) * 500 shares; or
(c) Capital Appreciation (If shares above $42.50 strike price at the June 13th options expiration): -$690.00
= ($42.50 - $43.881) * 500 shares

1. Potential Net Profit (If Bank of America shares assigned on 6/5/2025, the day prior to the June 6th ex-dividend date): +$136.65
= (+$826.65 options income +$0.00 dividend income - $690.00 capital appreciation)
2. Potential Net Profit (If BAC price is above the $42.50 strike price at the June 13th options expiration): +$266.65
= (+$826.65 options income +$130.00 dividend income - $690.00 capital appreciation)

1. Absolute Return (If BAC shares assigned on 5/31/2023, the day prior to the June 1st ex-dividend date): +0.6%
= +$136.65/$21,113.35
Equivalent Annualized Return (If assigned early on day prior to ex-div date): +33.7%
= (+$136.65/$21,113.35) * (365/7 days)

2. Absolute Return (If BAC price is above $42.50 strike price at the June 13th options expiration): +1.3%
= +$266.65/$21,113.35
Equivalent Annualized Return (If assigned on the 6/1/2023 options expiration date): +32.9%
= (+$266.65/$21,113.35) * (365/14 days)

At least eight of the nine metrics used in the Covered Calls Advisor's Dividend Capture Strategy spreadsheet (see below) must be 'YES' prior to establishing a new Covered Calls position using the Covered Calls Advisor's Dividend Capture strategy.  As shown below, all nine criteria are achieved for this Bank of America Covered Calls position.

Established Covered Calls in Nvidia Corporation

This afternoon a Covered Calls position was established in Nvidia Corporation (ticker NVDA).  Nvidia's earnings report yesterday was stellar and their guidance for next quarter was also encouraging.  This morning I established a net buy/write limit order at $130.50 which I thought would be unlikely to be executed today.  But at 1:46pm ET, four hundred shares were purchased at $138.95 and four June 13th, 2025 weekly Call options were sold at the $133.00 strike price at $8.45 per share, which provides a $2.50 per share time value profit potential.  There was a 68.0% probability that the stock will be in-the-money on its 6/13/2025 options expiration date.

Because of my continuing bullish outlook on 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 negative news causes a significant stock price decline. 

 

As detailed below, a potential return-on-investment result is +1.9% absolute return-on-investment (equivalent to +46.5% annualized return-on-investment for the next 15 days) if the Nvidia share price is in-the-money (i.e. above the $133.00 strike price) and therefore assigned on its June 13th, 2025 options expiration date.  

Nvidia Corporation (NVDA) -- New Covered Calls Position

Today's buy/write net limit order transaction was as follows:
5/29/2025 Bought 400 Nvidia Corporation shares at $138.95.

5/29/2025 Sold 4 NVDA 6/13/2025 $133.00 Call options @ $8.45 per share.  The Implied Volatility of these Calls was 43.2% 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: $52,202.68
= ($138.95 - $8.45) * 400 shares + $2.68 commission

Net Profit:
(a) Options Income: +$3,377.32
= ($8.45 * 400 shares) - $2.68 commission
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If 400 Nvidia shares assigned at the $133.00 strike price at expiration): -$2,380.00
+($133.00 strike price - $138.95 stock purchase price) * 400 shares

Total Net Profit Potential (If 400 Nvidia shares in-the-money and therefore assigned at the $133.00 strike price at the options expiration date): +$997.32
= (+$3,377.32 options income + $0.00 dividend income - $2,380.00 capital appreciation)

Potential Absolute Return-on-Investment: +1.9%
= +$997.32/$52,202.68
Potential Annualized Return-on-Investment: +46.5%
= (+$997.32/$52,202.68) * (365/15 days)

Established Covered Call Position in Home Depot Inc.

A buy/write limit order in Home Depot Inc. (ticker HD) was executed at my net debit price of $359.00 per share. One hundred shares were purchased at $369.71 and one June 13th, 2025 Call option was sold for $10.71 at the $362.50 strike price. So, the potential time value profit is $3.50 per share = [$10.71 option premium - ($369.71 stock price - $362.50 strike price)] is possible if this Covered Calls position is closed out by assignment.  

This position uses my Dividend Capture Strategy since Home Depot has an upcoming quarterly ex-dividend of $2.30 per share on June 5th which is prior to the June 13th options expiration.  This is equivalent to an annualized dividend yield of 2.5% (at the $369.71 stock price) and an equivalent annualized dividend yield of 14.2% = [($2.30/$369.71) x (365/16 days to expiration)] for the 16 days duration of this position.  This dividend is included in the detailed return-on-investment calculations shown below.  Either an early assignment on the day prior to the ex-dividend date or on the June 13th options expiration date would be desirable given the potential annualized return-on-investment results for either outcome.

As shown on the table at the bottom of this post, all nine criteria of the  Dividend Capture Strategy are met with this position, and the probability that the position will be in-the-money at market close on the options expiration date was 67.9%.  

As detailed below, two potential return-on-investment results are: 

•  +1.0% absolute return (equivalent to +44.4% annualized return-on-investment for the 8 days) if the stock is assigned early (the last business day prior to the June 5th ex-dividend date).
  

• +1.6% absolute return (equivalent to +36.8% annualized return-on-investment over the next 16 days) if the stock is assigned on the June 13th, 2023 options expiration date.

Home Depot Inc. (HD) -- New Covered Call Position
The buy/write transaction was:
5/28/2025 Bought 100 Home Depot shares @ $369.71
5/28/2025 Sold 1 Home Depot 6/13/2025 $362.50 Call option @ $10.71
Note: Implied Volatility (IV) of the Call option was at 20.2 when this position was established.   
6/5/2025 Upcoming quarterly ex-dividend of $2.30 per share

Two possible overall performance results (including commissions) for this Home Depot Covered Call position are as follows:
Covered Calls Cost Basis: $35,900.67
= ($369.71 - $10.71) * 100 shares + $.67 commission

Net Profit Components:
(a) Option Income: +$1,070.33
= ($10.71 * 100 shares) - $.67 commission
(b) Dividend Income (If option exercised early on June 4th, 2025, the business day prior to the June 5th ex-div date): +$0.00; or
(b) Dividend Income (If Home Depot stock assigned at the June 13th, 2025 options expiration date): +$230.00
= ($2.30 dividend per share x 100 shares)

(c) Capital Appreciation (If Home Depot Call option assigned early): -$721.00
+($362.50 strike price - $369.71 stock purchase price) * 100 shares; or
(c) Capital Appreciation (If shares assigned at $362.50 strike price at options expiration): -$721.00
+($362.50 - $369.71) * 100 shares

1. Total Net Profit [If option exercised on June 4th (business day prior to the June 5th ex-dividend date)]: +$349.33

= (+$1,070.33 option income + $0.00 dividend income - $721.00 capital appreciation); or

2. Total Net Profit (If Home Depot shares assigned at $362.50 at the June 13th, 2025 expiration): +$579.33

= (+$1,070.33 option income + $230.00 dividend income - $721.00 capital appreciation)

1. Absolute Return-on-Investment [If option exercised on business day prior to ex-dividend date]: +1.0%

= +$349.33/$35,900.67

Annualized Return-on-Investment (If option exercised early): +44.4%

= (+$349.33/$35,900.67) * (365/8 days); or

2. Absolute Return-on-Investment (If Home Depot shares assigned on June 13th options expiration date): +1.6%

= +$579.33/$35,900.67

Annualized Return-on-Investment (If Home Depot shares assigned at $362.50 strike price on the June 13th, 2025 options expiration date): +36.8%

= (+$579.33/$35,900.67) * (365/16 days)

As shown in items 8 and 9 in the table below, either outcome provides a satisfactory return-on-investment result for this Home Depot investment.  These returns will be achieved as long as the stock is above the $280.00 strike price at assignment.  However, if the stock declines below the strike price, the breakeven price of $276.16 ($291.33 -$13.08 -$2.09) provides 5.2% downside protection below today's stock purchase price.

At least eight of the nine metrics used in the Covered Calls Advisor's Dividend Capture Strategy spreadsheet (see below) must be 'YES' prior to establishing a new Covered Calls position using the Covered Calls Advisor's Dividend Capture strategy.  As shown below, all nine criteria are achieved for this Home Depot Inc. Covered Call position.

Covered Calls Position Closed in Nvidia Corporation

Today I closed out my Covered Calls position in Nvidia Corporation (NVDA).  The position was unwound by selling-to-close the 400 shares and simultaneously buying-to-close the 4 May 30th, 2025 $125.00 Call options.  I decided to close out this position at a net profit before Nvidia's earnings report (which is after the market close today) because of the usual stock price volatility that often occurs immediately after quarterly earnings are reported.   

As detailed below, the results for this Nvidia Covered Calls investment was +1.3% absolute return-on-investment (equivalent to +39.9% annualized return-on-investment) for the 12 days. 

Nvidia Corporation (NVDA) -- Covered Calls Position Closed Out by Decision

The buy/write market order transaction was as follows:

5/16/2025 Bought 400 Nvidia Corporation shares at $135.12.

5/16/2025 Sold 4 NVDA 5/30/2025 $125.00 Call options @ $12.70 per share. 

5/28/2025 Closed out (i.e. unwound) this NVDA Covered Calls position by selling-to-close 400 NVDA shares @ $136.36 per share and simultaneously buying-to-close 4 May 30th, 2025 $125.00 Calls @ $12.32 per share.

The overall performance result (including commissions) for this Nvidia Corporation Covered Calls position is as follows:
Covered Calls Net Investment: $48,970.68
= ($135.12 - $12.70) * 400 shares + $2.68 commission

Net Profit:
(a) Options Income: +$146.64
= ($12.70 Calls sell-to-open price - $12.32 Calls Buy-to-close price) * 400 shares - $5.36 commissions
(b) Dividend Income: +$0.00
(c) Capital Appreciation: +$496.00
+($136.36 stock sell-to-close price - $135.12 stock purchase price) * 400 shares

Total Net Profit: +642.64
= (+$146.64 options income + $0.00 dividend income + $496.00 capital gain on sale of stock)

Absolute Return-on-Investment: +1.3%
= +$642.64/$48,970.68
Annualized Return-on-Investment: +39.9%
= (+$642.64/$48,970.68) * (365/12 days)

Established Covered Call in UnitedHealth Group Inc.

A new Covered Call position was established in UnitedHealth Group Inc. (ticker UNH).  One hundred shares were purchased at $295.51 and one June 6th, 2025 weekly Call option was sold at the $280.00 strike price at $22.24 per share--a buy/write net debit amount of $273.27 per share which provides a $6.73 per share time value profit potential. 

The Implied Volatility of this Call options was very high at 59.0 which is explained by the recent precipitous decline in the stock price caused by the uncertainty related to its recent news related to its Medicare Advantage medical loss ratio deterioration as well as Federal government inquiries.  Based on the recent insider purchases by several top management executives at UNH, my belief is that the price decline is overdone.  So, I decided to establish a short-term moderately in-the-money strike price with a 66.2% probability that the stock will be in-the-money on its 6/6/2025 expiration date. 

 

As detailed below, a potential return-on-investment result is +2.5% absolute return-on-investment (equivalent to +64.1% annualized return-on-investment for the next 14 days) if the UnitedHealth share price is in-the-money (i.e. above the $280.00 strike price) and therefore assigned on its June 6th, 2025 options expiration date.  

UnitedHealth Group Inc. (UNH) -- New Covered Call Position

The buy/write net limit order transaction was as follows:
5/23/2025 Bought 100 UnitedHealth Group Inc. shares at $295.51.

5/23/2025 Sold 1 UNH 6/6/2025 $280.00 Call option @ $22.24 per share.  

A possible overall performance result (including commissions) for this UnitedHealth Covered Call position is as follows:
Covered Call Net Investment: $27,327.67
= ($295.51 - $22.24) * 100 shares + $.67 commission

Net Profit:
(a) Options Income: +$2,223.33
= ($222.24 * 100 shares) - $.67 commission
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If 100 UnitedHealth Group shares assigned at the $280.00 strike price at expiration): -$1,551.00
+($280.00 strike price - $295.51 stock purchase price) * 100 shares

Total Net Profit Potential (If 100 UnitedHealth shares in-the-money and therefore assigned at the $280.00 strike price at the options expiration date): +$672.33
= (+$2,223.33 option income + $0.00 dividend income - $1,551.00 capital appreciation)

Potential Absolute Return-on-Investment: +2.5%
= +$672.33/$27,327.67
Potential Annualized Return-on-Investment: +64.1%
= (+$672.33/$27,327.67) * (365/14 days)

Established Covered Call Position in T-Mobile US Inc.

My buy/write limit order in T-Mobile US Inc. (ticker TMUS) was executed this morning at the net debit limit price of $230.26 per share. One hundred shares were purchased at $240.65 and one June 6th, 2025 Call option was sold for $10.39 per share at the $232.50 strike price, a time value of $2.24 per share = [$10.39 Call option premium - ($240.65 stock price - $232.50 strike price)].  This position is moderately in-the-money since the probability that the position will be in-the-money on its June 6th options expiration date was 74.1% when this transaction was executed today.   

This position uses the Covered Calls Advisor's Dividend Capture Strategy (see here).  T-Mobile has an upcoming quarterly ex-dividend of $.88 per share that goes ex-dividend on May 30th, 2025 which is one week prior to the June 6th, 2025 options expiration date. This is equivalent to an absolute annual dividend yield of 1.5% (at the current $240.65 stock price). This dividend increases the potential annualized return-on-investment results (compared with a similar position without a dividend capture potential) and the dividend is included in the detailed potential return-on-investment calculations shown below.  Either an early assignment on the last business day prior to the ex-dividend date or on the June 6th, 2025 options expiration date would be a desirable result given the annualized return-on-investment potential upon assignment for either outcome.  As preferred, there is no intervening T-Mobile quarterly earnings report prior to their June 6th options expiration date.

T-Mobile is now one of the three telecom triopoly companies (along with Verizon and AT&T).  Together they hold about 97% of U.S. market share with T-Mobile at 131 million subscribers and a 32% share as of Q1 2025.  Verizon has 36% share and AT&T has 29% share.  It now seems most likely that 2025 will be a relatively stagnant retail sales environment in the U.S. overall, but consumers are likely to be unwilling to eliminate their cell phone subscriptions in a meaningful way.

As detailed below, two potential return-on-investment results are: 

•  +1.0% absolute return (equivalent to +39.3% annualized return-on-investment for the next 9 days) if the stock is assigned early (the last business day prior to the May 30th ex-dividend date); OR 

• +1.4% absolute return (equivalent to +30.8% annualized return over the next 16 days) if the stock is assigned on the June 6th, 2025 options expiration date.

T-Mobile US Inc. (TMUS) -- New Covered Call Position
The simultaneous buy/write transaction was:
5/21/2025 Bought 100 T-Mobile shares @ $240.65.
5/21/2025 Sold 1 T-Mobile 6/6/2025 $232.50 Call option @ $10.39 per share.
Note: the Implied Volatility of this Call option was 25.3 when this position was established.
5/30/2025 Upcoming quarterly ex-dividend of $.88 per share.

Two possible overall performance results (including commissions) for this T-Mobile Covered Call position are as follows:
Covered Call Cost Basis: $23,026.67
= ($240.65 - $10.39) * 100 shares + $.67 commission

Net Profit Components:
(a) Option Income: +$1,038.33
= ($10.39 * 100 shares) - $.67 commission
(b) Dividend Income (If TMUS option exercised early on May 29th, the last business day prior to the May 30th, 2025 ex-div date): +$0.00; or
(b) Dividend Income (If stock is assigned on the June 6th, 2025 options expiration -- so the dividend is captured): +$88.00
= ($.88 dividend per share x 100 shares)

(c) Capital Appreciation (If T-Mobile Call option is assigned early on May 29th): -$815.00
+($232.50 strike price - $240.65 stock purchase price) * 100 shares; or
(c) Capital Appreciation (If shares assigned at $232.50 strike price at options expiration): -$815.00
+($232.50 - $240.65) * 100 shares

1. Total Net Profit (If options exercised early): +$223.33

= (+$1,038.33 option income + $0.00 dividend income - $815.00 capital appreciation); or

2. Total Net Profit (If T-Mobile shares assigned at $232.50 strike price at the June 6th, 2025 expiration): +$311.33

= (+$1,038.33 option income + $88.00 dividend income - $815.00 capital appreciation)

1. Absolute Return-on-Investment [If option exercised on business day prior to the May 30th ex-dividend date]: +1.0%

= +$223.33/$23,026.67

Annualized Return-on-Investment (If option exercised early): +39.3%

= (+$223.33/$23,026.67) * (365/9 days); or

2. Absolute Return-on-Investment (If TMUS shares assigned on the June 6th, 2025 options expiration date): +1.4%

= +$311.33/$23,026.67

Annualized Return-on-Investment (If T-Mobile shares assigned at $232.50 at the June 6th, 2025 expiration): +30.8%

= (+$311.33/$23,026.67) * (365/16 days)

Either outcome provides a satisfactory return-on-investment result for this T-Mobile US Inc. Covered Call investment.  These returns will be achieved as long as the stock is above the $232.50 strike price at assignment.  However, if the stock declines below the strike price, a breakeven price of $229.38 = ($240.65 stock price - $10.39 Call option price - $.88 dividend) provides 4.7% downside protection below today's stock purchase price.

May 16th, 2025 Monthly Options Expiration Results

The Covered Calls Advisor Portfolio had three Covered Calls positions with May 16th, 2025 monthly options expirations and all three positions closed with their stock prices in-the-money. The Calls expired yesterday with no remaining value and the Covered Calls were closed out by the stocks being sold at their respective strike prices, so the maximum potential return-on-investment profit was achieved for these three positions.  The return-on-investment details for each position is as follows:

1. Nvidia Corporation (NVDA) -- +6.0% absolute return-on-investment (equivalent to +41.3% annualized return-on-investment) for the 53 days of this investment.  This Nvidia Covered Calls position had a $115.00 strike price and it closed at $135.40 yesterday.  The most recent blog post showing the details of this position is here. 

2. Oneok Inc. (OKE) -- +2.3% absolute return-on-investment (equivalent to +39.1% annualized return-on-investment) for the 21 days of this investment.  This Oneok position had a $80.00 strike price and it closed at $85.67 yesterday.  The blog post showing the details of this position is here.

3. Wells Fargo & Co. (WFC) -- +1.4% absolute return-on-investment (equivalent to +46.2% annualized return-on-investment) for the 11 days of this investment.  This Wells Fargo position had a $72.00 strike price and it closed at $76.18 yesterday.  The blog post showing the details of this position is here. 

As always, I welcome your questions at the email address shown below on any topics related to the Covered Calls investing strategy. 

Jeff Partlow
The Covered Calls Advisor
partlow@cox.net

Established Covered Calls in Nvidia Corporation

Today a Covered Calls position was established in Nvidia Corporation (ticker NVDA). Four hundred shares were purchased at $135.12 and four May 30th, 2025 weekly Call options were sold at the $125.00 strike price at $12.70 per share--a buy/write net debit amount of $122.42 per share which provides a $2.58 per share time value profit potential. 

Nvidia is very highly ranked in several of my stock screeners and although the TTM P/E Ratio is relatively high at 45, it is historically low for Nvidia and is satisfactory given its future estimated potential sales and profits growth rates.  So, I decided I wanted to continue with an ongoing Covered Calls position in Nvidia.  Since my current Nvidia CC position expires today and will be assigned, I established another new NVDA CC position to continue with my investment in Nvidia.  The Implied Volatility of these Calls is very high at 61.3 which is attributable to the existence of its quarterly earnings report on May 28th (which is prior to the May 30th options expiration date).  Consequently, I decided to establish a moderately in-the-money strike price with a 72.6% probability that the stock will be in-the-money on its 5/30/2025 expiration date. 

 

As detailed below, a potential return-on-investment result is +2.1% absolute return-on-investment (equivalent to +54.8% annualized return-on-investment for the next 14 days) if the Nvidia share price is in-the-money (i.e. above the $125.00 strike price) and therefore assigned on its May 30th, 2025 options expiration date.  

Nvidia Corporation (NVDA) -- New Covered Calls Position

Today's buy/write net limit order transaction was as follows:
5/16/2025 Bought 400 Nvidia Corporation shares at $135.12.

5/16/2025 Sold 4 NVDA 5/30/2025 $125.00 Call options @ $12.70 per share.  

A possible overall performance result (including commissions) for this Nvidia Corporation Covered Calls position is as follows:
Covered Calls Net Investment: $48,970.68
= ($135.12 - $12.70) * 400 shares + $2.68 commission

Net Profit:
(a) Options Income: +$5,077.32
= ($12.70 * 400 shares) - $2.68 commission
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If 400 Nvidia shares assigned at the $125.00 strike price at expiration): -$4,048.00
+($125.00 strike price - $135.12 stock purchase price) * 400 shares

Total Net Profit Potential (If 400 Nvidia shares in-the-money and therefore assigned at the $125.00 strike price at the options expiration date): +$1,029.32
= (+$5,077.32 options income + $0.00 dividend income - $4,048.00 capital appreciation)

Potential Absolute Return-on-Investment: +2.1%
= +$1,029.32/$48,970.68
Potential Annualized Return-on-Investment: +54.8%
= (+$1,029.32/$48,970.68) * (365/14 days)

May 9th, 2025 Option Expiration Results

The Covered Calls Advisor Portfolio had one Covered Calls position in D.R. Horton Inc. (DHI) at the May 9th, 2025 weekly options expiration date and at the $120.00 strike price.  The position closed in-the-money yesterday at $122.03 per share, so the Call options expired and the 200 DHI shares were sold at their $120.00 strike price.  So, despite a decline in the stock price from its original purchase price of $125.39 to $122.03 yesterday, this position was profitable because (a) an in-the-money Covered Calls strike price was selected; and (2) my dividend capture strategy (see here) was used.  A summary of the results is:

DHI -- +1.3% absolute return-on-investment (equivalent to +43.6% annualized return-on-investment) for the 11 days of this Covered Calls investment.  The original blog post when this position was established is here. 

Jeff Partlow
The Covered Calls Advisor
partlow@cox.net

Early Assignment of Las Vegas Sands Corp.

This morning I received an email notification from my broker (Schwab) that the 5 Las Vegas Sands Corp. (ticker symbol LVS) May 16th, 2025 Call options were exercised early, so the 500 shares of Las Vegas Sands stock in the Covered Calls Advisor Portfolio were assigned (i.e. sold) at the $34.00 strike price. 

Las Vegas Sands stock was $38.31 at yesterday's market close.  Early exercise by the owners of these Call options was expected since yesterday was the last business day before LVS's ex-dividend date and there was $.00 time value remaining in these Call options.  So the Call owner exercised their option to buy the shares in order to capture today's $.25 per share ex-dividend.  The per share stock price had increased from $35.98 when this Las Vegas Sands Corp. position was originally established on April 28th to $38.31 (which was 12.7% in-the-money) at yesterday's market close.  I remain very cautious on the stock market during the upcoming weeks, so I plan to keep the majority of my investments in a money market fund (including the cash received from closing out this LVS position).

As detailed below, the actual return-on-investment result achieved for this Las Vegas Sands position was +1.7% absolute return (equivalent to +78.3% annualized return-on-investment) for the 8 days this position was held. 

Las Vegas Sands Corporation (LVS) -- Covered Calls Position Closed by Early Assignment
The buy/write transaction was:
4/28/2025 Bought 500 Las Vegas Sands shares @ $35.98
4/28/2025 Sold 5 LVS 5/16/2025 $34.00 Call options @ $2.56 per share.
Note: Implied Volatility (IV) of the Call options was 43.6 when this position was transacted which, as preferred, is above the current VIX of 25.8.   
5/6/2025 Covered Calls position closed out by early assignment, so 5 LVS Calls expired and my 500 shares of LVS stock sold at the $34.00 strike price.

The overall performance result (including commissions) for this Las Vegas Sands Corp. Covered Calls position is as follows:
Covered Calls Net Investment: $16,713.35
= ($35.98 - $2.56) * 500 shares + $3.35 commission

Net Profit Components:
(a) Options Income: +$1,276.65
= ($2.56 * 500 shares) - $3.35 commission
(b) Dividend Income (LVS Call options exercised early on May 5th, 2025, the last business day prior to the May 6th ex-div date): +$0.00

(c) Capital Appreciation: -$990.00

+($34.00 strike price - $35.98 stock purchase price) * 500 shares

Total Net Profit: +$286.65

= (+$1,276.65 options income + $0.00 dividend income - $990.00 capital appreciation)

Absolute Return-on-Investment: +1.7%

= +$286.65/$16,713.35

Annualized Return-on-Investment: +78.3%

= (+$286.65/$16,713.35) * (365/8 days)

Established Covered Calls Position in Wells Fargo & Company

A short-term Covered Calls position was established in Wells Fargo & Company (ticker symbol WFC) today when the Covered Calls Advisor's buy/write limit order was executed -- 300 shares were purchased at $74.20 and 3 May 16th, 2025 monthly Call options were sold at $2.80 at the $72.00 strike price.  The corresponding extrinsic value (i.e. time value) was $.60 per share [$2.80 Call options premium - ($74.20 stock purchase price - $72.00 strike price)], all of which will be profit if the stock is assigned (either by early assignment on the day prior to the May 9th ex-dividend date or at the May 16th options expiration date). The Implied Volatility of the Call options was 27.7 which, as desired by the Covered Calls Advisor, is above the current 23.2 of the S&P 500 Volatility Index (i.e. VIX).  Also as preferred, the next earnings report on July 15th, 2025 is well after the options expiration date.

At today's purchase price, the upcoming ex-dividend of $.40 has a 2.2% annualized dividend yield.  So, this short-term (only 11 days until options expiration) position is established to take advantage of the potential to achieve a satisfactory annualized return-on-investment in a position that meets all nine criteria of the Covered Calls Advisor's Dividend Capture Strategy (see table at end of this post).  

Most companies in the Financial Sector (such as Wells Fargo) provide only modest growth prospects, but they often provide good annual dividend yields.  Consequently, the Covered Calls Advisor targets opportunities to use the Dividend Capture Strategy in all Financial Sector Covered Calls positions.  This new Wells Fargo Covered Calls position continues the Covered Calls Advisor's Dividend Capture Strategy of often selling in-the-money monthly Covered Calls for one of six mega-cap U.S. banks (Bank of America, Citigroup, JPMorgan Chase, Goldman Sachs, Morgan Stanley, and Wells Fargo) for each options expiration month: (JPMorgan Chase quarterly for Jan, Apr, July, and Oct options expirations; Citigroup, Morgan Stanley, and/or Wells Fargo for Feb, May, Aug, and Nov options expirations; and Bank of America and/or Goldman Sachs for Mar, Jun, Sep, and Dec options expirations).

The goal of these monthly Covered Calls in these banks is to both provide an opportunity to either: (1) potentially capture the quarterly dividend payment and if the stock price remains above the strike price at options expiration, in which case the maximum possible return-on-investment result on the options expiration date for the position would be achieved; or (2) have the stock assigned early on the day prior to the ex-dividend date in which case the Covered Calls Advisor is usually very pleased since the Dividend Capture Strategy criteria are designed such that the annualized return-on-investment for early assignment normally exceeds the Covered Calls Advisor's minimum threshold (as is the case with this Wells Fargo position).  So far, applying this approach has provided attractive annualized return results -- better than would be achieved if Covered Calls positions for these bank stocks were held in the Covered Calls Advisor Portfolio during the other two non-dividend paying months each quarter.  

Two potential return-on-investment results for this position are highlighted below (including the possibility of early assignment since the ex-dividend is prior to the May 16th options expiration date).  Given the Covered Calls Advisor's current Neutral overall market sentiment, a slightly in-the-money Covered Calls position was established with a probability of 73.0% that the stock will be in-the-money, and therefore assigned (i.e. sold), on the May 16th, 2024 options expiration date.  

As detailed below, two potential return-on-investment results are: 

•  +0.8% absolute return (equivalent to +75.8% annualized return for the next 4 days) in the relatively unlikely event that the stock is assigned early (business day prior to this Friday's 5/9/2025 ex-dividend date); OR 

• +1.4% absolute return (equivalent to +46.2% annualized return over the next 11 days) if the stock is assigned on the May 16th options expiration date.

Wells Fargo & Company (WFC) -- New Covered Calls Position
The buy/write transaction was:

5/5/2025 Bought 300 Wells Fargo shares @ $74.20
5/5/2025 Sold 3 Wells Fargo 5/16/2025 $72.00 Call options @ $2.80
5/9/2025 Upcoming quarterly ex-dividend of $.40 per share

Two possible overall performance results (including commissions) for this Wells Fargo Covered Calls position are as follows:
Covered Calls Net Investment: $21,422.01
= ($74.20 - $2.80) * 300 shares + $2.01 commission

Net Profit Components:
(a) Options Income: +$837.99
= ($2.80 * 300 shares) - $2.01 commission
(b) Dividend Income (If option exercised early on May 4th, the day prior to the May 5th ex-div date): +$0.00; or
(b) Dividend Income (If Wells Fargo stock assigned at the May 16th, 2025 options expiration; so the $.40 dividend is captured): +$120.00
= ($.40 dividend per share x 300 shares)

(c) Capital Appreciation (If Wells Fargo Call options assigned early on May 5th, 2025): -$660.00
+($72.00 strike price - $74.20 stock purchase price) * 300 shares; or
(c) Capital Appreciation (If shares assigned at $72.00 strike price at options expiration): -$660.00
+($72.00 - $74.20) * 300 shares

1. Total Net Profit [If option exercised on 5/4/2025 (business day prior to the 5/5/2025 ex-dividend date)]: +$177.99

= (+$837.99 options income +$0.00 dividend income - $660.00 capital appreciation); or

2. Total Net Profit (If Wells Fargo shares assigned at $72.00 at the 5/16/2025 expiration): +$297.99

= (+$837.99 options income + $120.00 dividend income - $660.00 capital appreciation)

1. Absolute Return-on-Investment [If option exercised early on 5/5/2025]: +0.8%

= +$177.99/$21,422.01

Annualized Return-on-Investment (If option exercised early): +75.8%

= (+$297.99/$21,422.01) * (365/4 days); or

2. Absolute Return-on-Investment (If Wells Fargo shares assigned at $72.00 at the 5/16/2025 options expiration): +1.4%

= +$297.99/$21,422.01

Annualized Return-on-Investment (If Wells Fargo shares assigned at $72.00 at the 5/16/2025 options expiration date): +46.2%

= (+$297.99/$21,422.01) * (365/11 days)

Either outcome provides a satisfactory return-on-investment result for this Wells Fargo investment.  These returns will be achieved as long as the stock is above the $72.00 strike price at assignment.  If the stock declines below the strike price, the breakeven price of $71.00 ($74.20 - $2.80 - $.40) provides a 4.3% downside protection below today's stock purchase price.

At least eight of the nine metrics used in the Covered Calls Advisor's Dividend Capture Strategy spreadsheet must be 'YES' prior to establishing a position.  As shown below with this Wells Fargo position, all nine criteria are met.

May 2nd, 2025 Weekly Options Expiration Results

One of the nice 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 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 May 2nd, 2025 weekly options expirations.  Both positions closed on this options expiration date yesterday with their stock prices 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 were achieved.  A summary of the return-on-investment results for each position is as follows:

1. Amazon.com Inc. (AMZN) -- +3.6% absolute return-on-investment (equivalent to +73.8% annualized return-on-investment) for the 18 days of this investment.  This Amazon.com position had a $175.00 strike price and it closed at $189.98 yesterday.  The blog post showing the details of this position on the day the position was originally established is here. 

2. Meta Platforms Inc. (META) -- +3.6% absolute return-on-investment (equivalent to +118.4% annualized return-on-investment) for the 11 days of this investment.  This Meta position had a $460.00 strike price and it closed yesterday at $597.02.  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 several readers have found especially helpful and that you might begin with titled "Exploiting Our Covered Calls Investing "Edges"' is here.  

As always, I welcome your comments or questions at the email address shown below on any topics related to the Covered Calls investing strategy. 

Jeff Partlow
The Covered Calls Advisor
partlow@cox.net