Covered Call Position Established in Humana Inc.

Today my net debit limit order was executed and a Covered Call position was established in Humana Inc. (ticker HUM) when the Covered Calls Advisor's buy/write limit order for the April 4th, 2025 $255.00 strike price was executed at a net debit price of $245.85. One hundred Humana shares were purchased at $266.35 and 1 April 4th, 2025 $255.00 Call was sold at $20.50 per share. So, the corresponding time value (aka extrinsic value) was $9.15 per share = [$20.50 Call options premium - ($266.35 stock purchase price - $255.00 strike price)].  The Implied Volatility of this Call option was very high at 69.7 when this position was established so, as shown below, the potential return-on-investment is also very high.    

Also, Humana goes ex-dividend on 3/28/2025) at $.885 (a 1.3% annualized dividend yield) at today's stock purchase price. This dividend is included in the potential return-on-investment result shown below. Also, as preferred, there is no earnings report prior to the options expiration date.

 
As detailed below a potential return-on-investment result if this Humana Covered Call position if the stock is assigned on its March 28th, 2025 options expiration date is +4.1% absolute return (equivalent to +99.3% annualized return-on-investment over the next 15 days).

Humana Inc. (HUM) -- New Covered Call Position
The simultaneous buy/write transactions was as follows:
3/20/2025 Bought 100 shares of Humana Inc. stock @ $266.35 per share 
3/20/2025 Sold 1 Humana March 28th, 2025 $255.00 Call option @ $20.50 per share
3/28/2025 Upcoming ex-dividend at $.885 per share

A potential overall performance result (including commissions) would be as follows:
Covered Calls Cost Basis: $24,585.67
= ($266.35 - $20.50) * 100 shares + $.67 commission

Net Profit Components:
(a) Options Income: +$2,049.33
= ($20.50 * 100 shares) - $.67 commission
(b) Dividend Income (If Humana stock assigned on the March 28th options expiration date): +$88.50
= $.885 dividend per share x 100 shares
(c) Capital Appreciation (If Humana stock is above the $255.00 strike price and therefore assigned on the 4/4/2025 option expiration date): -$1,135.00
= ($255.00 strike price - $266.35 stock purchase price) * 100 shares

Potential Net Profit (If stock price is above its $255.00 strike price at the 4/4/2025 options expiration date): +$1,002.83
= (+$2,049.33 options income +$88.50 dividend income - $1,135.00 capital appreciation) 

Potential Absolute Return-on-Investment: +4.1%
= +$1,002.83/$24,585.67
Potential Equivalent Annualized Return-on-Investment: +99.3%
= (+$1,002.83/$24,585.67) * (365/15 days)

Covered Call Position Established in Alphabet Inc.

Late this morning a new short-term Covered Call net debit buy/write limit order was established in Alphabet Inc. (ticker GOOGL) for the July 31st, 2026 expiration and at the $305.00 strike price.  The stock price declined by over 7% this morning after yesterday afternoon's quarterly earnings results.  Investors reacted negatively to the increased capex plan for this year and the negative free cash flow for this quarter. The order was placed at a $302.34 limit price, so the extrinsic value (which represents the maximum profit potential for this position) was $2.66 per share [$15.30 Call option premium - ($317.64 stock purchase price - $305.00 strike price)].  The probability that this position will be in-the-money and therefore assigned on its options expiration date was 76.1% when this order was transacted.

As detailed below, the potential return-on-investment result is +0.9% absolute return-on-investment in 8 days (equivalent to a +40.0% annualized return-on-investment).  

Alphabet Inc. (GOOGL) -- New Covered Calls Position

The simultaneous buy/write transaction was as follows:
7/23/2026 Bought 100 shares of Alphabet Inc. stock @ $317.64 per share.  
7/23/2026 Sold 1 Alphabet Inc. July 31st $305.00 Call option @ $15.30 per share.
Note: The Implied Volatility of the Call options was 37.4 when this transaction was executed which, as I prefer, is well above the current 19.0 of the S&P 500 Volatility Index (i.e. VIX). 

A possible overall performance result (including commissions) would be as follows:
Covered Call Cost Basis: $30,234.67
= ($317.64 - $15.30) * 100 shares + $.67 commission

Net Profit Components:
(a) Option Income: +$1,529.33
= ($15.30 * 100 shares) - $.67
(b) Dividend Income: +$0.00 
(c) Capital Appreciation (If Alphabet stock is above $305.00 strike price at the 7/31/2026 options expiration date): -$1,264.00
= ($305.00 strike price - $317.64 stock purchase price) * 100 shares

Total Net Profit Potential: +$265.33
= (+$1,529.33 option income +$0.00 dividend income - $1,264.00 capital appreciation)

Potential Absolute Return-on-Investment: +0.9%
= +$265.33/$30,234.67
Potential Equivalent Annualized Return-on-Investment: +40.0%
= (+$265.33/$30,234.67) * (365/8 days)

Established Covered Calls in Robinhood Markets Inc.

Early this afternoon a Covered Calls position was established in Robinhood Markets Inc. (ticker HOOD). Three hundred shares were purchased at $36.02 and three March 28th, 2025 weekly Call options were sold at the $32.00 strike price at $5.16 per share--a buy/write net debit amount of $30.86 per share which provides a $1.14 per share time value profit potential.  A Covered Calls position was established instead of a 100% Cash-Secured Puts position since the maximum time value profit potential of $1.14 per share for the Covered Calls exceeds the $1.05 per share time value available for the Puts when this position was established. 

As detailed below, a potential return-on-investment result is +3.7% absolute return-on-investment (equivalent to +89.3% annualized return-on-investment for the next 15 days) if the Robinhood share price is in-the-money (i.e. above the $32.00 strike price) and therefore assigned on its March 28th, 2025 options expiration date.  The probability this outcome will be achieved was 69.4% when this position was established.  

Robinhood is a $32 billion market cap company in the Investment Banking and Brokerage sub-industry within the Capital Markets industry.  It is the 5th largest company in that sub-industry behind Morgan Stanley, Goldman Sachs, Schwab, and Interactive Brokers.  Something that appeals to me about Robinhood is their highly fintech business model.  Their 47.8% net margin is substantially greater than the 23% to 30% net margin range of MS, GS, and Schwab and they dwarf the 8% of Interactive Brokers.  They are also growing rapidly having just reported year-over-year stats through February 2025 such as: (1) +8% funded new customers; (2) +45% net new deposits; and (3) +58% assets under custody.  

As Covered Calls investors, we try to take advantage of temporary spikes in Implied Volatility by selling Calls against the stock purchased.  Because of the overall market decline and the much greater decline in Robinhood's stock price over the past month, the Implied Volatility of the Call options sold was an incredibly high 96.4 today when this position was established.  So, this position is a very risky one, but one in which selling a deep in-the-money strike price helps to mitigate the risk while at the same time establishing the potential for a substantial return-on-investment if the stock price is above the $32.00 strike price on the March 28th options expiration date.    

 
Robinhood Markets Inc. (HOOD) -- New Covered Calls Position

The buy/write market order transaction was as follows:
3/13/2025 Bought 300 Robinhood Markets shares at $36.02.

3/13/2025 Sold 3 HOOD 3/28/2025 $32.00 Call options @ $5.16 per share.  These $32.00 Calls were 12.6% in-the-money when this position was established.  

A possible overall performance result (including commissions) for this Robinhood Covered Calls position is as follows:
Covered Calls Net Investment: $9,260.01
= ($36.02 - $5.16) * 300 shares + $2.01 commission

Net Profit:
(a) Options Income: +$1,545.99
= ($5.16 * 300 shares) - $2.01 commission
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If 300 Robinhood shares assigned at the $32.00 strike price at the options expiration): -$1,206.00
+($32.00 strike price - $36.02 stock purchase price) * 300 shares

Total Net Profit Potential: +$339.99
= (+$1,545.99 options income + $0.00 dividend income - $1,206.00 capital appreciation)

Potential Absolute Return-on-Investment: +3.7%
= +$339.99/$9,260.01
Potential Annualized Return-on-Investment: +89.3%
= (+$339.99/$9,260.01) * (365/15 days)

Covered Calls Position Established in Taiwan Semiconductor ADR

Today my net debit limit order was executed and a Covered Calls position was established in Taiwan Semiconductor ADR (ticker TSM) when the Covered Calls Advisor's buy/write limit order for the March 28th, 2025 $160.00s executed at a net debit price of $156.60. Two hundred Taiwan Semi shares were purchased at $169.68 and 2 March 28th, 2025 $160.00 Calls were sold at $13.08 per share. So, the corresponding time value (aka extrinsic value) was $3.40 per share = [$13.08 Call options premium - ($169.68 stock purchase price - $160.00 strike price)]. Given the Covered Calls Advisor's current Neutral Overall Market Meter outlook, a slightly in-the-money Covered Calls position was established--the probability that the position will close in-the-money and therefore by assigned on the 3/28/2025 options expiration date was 70.2% when this position was established. In addition, the Implied Volatility of the Calls was 48.8 which, as desired, was above the VIX which is now 28.7. 

Taiwan Semi goes ex-dividend in one week (on 3/18/2025) at $.6942 (a 1.6% annualized dividend yield) at today's stock purchase price. This dividend is included in the potential return-on-investment result shown below. Also, as preferred, there is no earnings report prior to the options expiration date and the analysts' current average stock target price is $234.16 per share (+38.0% above today's purchase price).

 
As shown in my GARP (Growth at a Reasonable Price) stock screener results below, TSM meets every filter criteria.  

As detailed below a potential return-on-investment result if this Taiwan Semi Covered Calls position if the stock is assigned on its March 28th, 2025 options expiration date is +2.6% absolute return (equivalent to +56.0% annualized return-on-investment over the next 17 days).

Taiwan Semiconductor ADR (TSM) -- New Covered Calls Position
The simultaneous buy/write transactions was as follows:
3/11/2025 Bought 200 shares of Taiwan Semiconductor stock @ $169.08 per share 
3/11/2025 Sold 2 Taiwan Semi March 28th, 2025 $160.00 Call options @ $13.08 per share
3/18/2025 Upcoming ex-dividend at $.6942 per share

A potential overall performance result (including commissions) would be as follows:
Covered Calls Cost Basis: $31,321.34
= ($169.68 - $13.08) * 200 shares + $1.34 commission

Net Profit Components:
(a) Options Income: +$2,614.66
= ($13.08 * 200 shares) - $1.34 commission
(b) Dividend Income (If TSM stock assigned on the March 28th options expiration date): +$138.84
= $.6942 dividend per share x 200 shares
(c) Capital Appreciation (If TSM stock is above the $160.00 strike price and therefore assigned at the 3/28/2025 expiration date): -$1,936.00
= ($160.00 - $169.68) * 200 shares

Potential Net Profit (If stock price is above $160.00 strike price at the 3/28/2025 options expiration): +$817.50
= (+$2,614.66 options income +$138.84 dividend income - $1,936.00 capital appreciation) 

Potential Absolute Return-on-Investment: +2.6%
= +$817.50/$31,321.34
Potential Equivalent Annualized Return-on-Investment: +56.0%
= (+$817.50/$31,321.34) * (365/17 days)