As detailed below, a potential return-on-investment result is +2.3% absolute return-on-investment (equivalent to +38.6% annualized return-on-investment for the next 22 days) if the Netease Inc. share price is in-the-money (i.e. above the $100.00 strike price) and therefore assigned on its April 19th, 2024 options expiration date.
Netease Inc. ADR (NTES) -- New Covered Calls Position
3/28/2024 Bought 200 shares of Netease Inc. @ $103.50 per share.
3/28/2024 Sold 2 NTES April 19th, 2024 $100.00 Call options @ $5.78 per share. The Implied Volatility of these Call options was 35.6 today when this transaction was executed and its Beta (1-year) is 1.02.
A possible overall performance result (including commissions) for this Netease Inc. ADR Covered Calls position is as follows:
Covered Calls Net Investment: $19,545.34
= ($103.50 - $5.78) * 200 shares + $1.34 commission
Net Profit:
(a) Options Income: +$1,154.66
= ($5.78 * 200 shares) - $1.34 commission
(b) Dividend Income: +$0.00
(c) Capital Appreciation (If 200 Netease Inc. shares assigned at $100.00 strike price at the options expiration date): -$700.00
+($100.00 - $103.50) * 200 shares
Total Net Profit Potential (If 200 Netease Inc. shares assigned at $100.00 strike price at the options expiration date): +$454.66
= (+$1,154.66 options income +$0.00 dividend income -$700.00 capital appreciation)
Potential Absolute Return-on-Investment: +2.3%
= +$454.66/$19,545.34
Potential Annualized Return-on-Investment: +38.6%
= (+$454.66/$19,545.34) * (365/22 days)