Covered Call on SDC - Potential income return 6.45% in 7 days

Covered Call on SDC - Potential income return 6.45% in 7 days

On June 5, 2020, we bought on margin 110 shares of SDC stock (SmileDirectClub Inc) paying $8.83 per share and simultaneously sold June 12, 2020 expiry covered call at the strike price of $9 for what we got a premium of $0.4 (before commissions)

SDC stands for SmileDirectClub - a teledentistry company listed on Nasdaq. According to Google, it has a market capitalization of some 2.9 bln. Impressive.

This trade comes as the fourth in the month of June, and if we stick with our trading plan for this month, premium generated from this trade makes us about 6.26% from our $600 monthly goal, while in total we have already reached 31.9% from our goal in just 5 days. Wow.

This is also our first covered call with SDC here on, in the past we have done a few naked puts, though, here on and have collected some premium, but we still believe investing with covered calls has more advantages than investing with puts.

SDC is a ticker we first learned from Covered Calls With Jeff.

here is our trade setup:

  • BOT 110 SDC Stock 8.83 USD

  • SLD 1 SDC JUN 12 '20 9 Call Option 0.4

what can happen next:

If SDC is trading below our strike price of $9 at the expiry date (June 12, 2020), in such case, we keep the premium and sell more covered calls to lower our cost basis. Our break-even price: $8.43

In case SDC is trading above our strike price of $9, our shares get called away at strike price $9 and we realize our max gain $57, or 6.45% potential income in just 7 days

Selling Covered calls and puts with SDC

Selling Covered calls and puts with SDC

  • Running Total 7 Trades since April 27, 2020

  • Trade P/L $197

kaupeens Fri, 06/05/2020 - 15:18