Copyright 2014
Arrow Publications
ARROW PUBLICATIONS


                        
                       

    
"Books
that
      Behave"
COVERED CALL WRITING
CALCULATION EXAMPLES
email me
     The following covered call writing calculations were made with one of the Microsoft Excel PC templates provided with every copy of COVERED CALL WRITING DEMYSTIFIED, COVERED CALL WRITING WITH EXCHANGE TRADED FUNDS (ETFs) and COVERED CALL WRITING WITH Qs AND DIAMONDS:
     The "Total Annual Yield" column is the return to the investor on an annualized basis from premium income and dividends (if any).  Note that for the first strike price ($40), which is a fair amount above the current market price the returns are all very solidly double-digit.. And for the next highest strike price ($42.50) all of the expiration dates offer above 8%, with large potential for additional capital appreciation.

     The "Annual Yield/W Cap. App." is the return to the investor on an annualized basis from premium income, dividends (if any), and capital appreciation (if the price of the stock is higher than the strike price when the call options expire).  Since a rise in the underlying stock is uncertain, the best measure of returns from covered call option writing is the "Total Annual Yield."
Actual Covered Call Writing Calculations for Bed, Bath & Beyond (BBBY)
SHARE
PRICE

DIV.
EXPIRATION
DATE
STRIKE
PRICE
DAYS
TO
EXP.
OPTION
SYMBOL
PREM.
TOTAL
ANNUAL
YIELD
ANNUAL
YIELD/W
CAP. APP.
$38.53
$38.53
$38.53

$38.53
$38.53
$38.53




$0.00
$0.00
$0.00

$0.00
$0.00
$0.00




21-May
20-Aug
19-Nov

21-May
20-Aug
19-Nov



$40.00
$40.00
$40.00

$42.50
$42.50
$42.50



   33
  124 
  215
  
    33
  124
  215
  
 
 

BHQEH
BHQHH
BHQKH

BHQEV
BHQHV
BHQKV



$0.75
$2.05
$3.00

$0.30
$1.15
$2.00



21.53%
15.66%
13.22%

  8.61%
  8.79%
  8.81%



  63.73%
  26.89%
  19.70%
 
122.58%
  39.11%
  26.30%



ARROW PUBLICATIONS