Covered Call on SPCE - Potential income return 7.2% in 7 days
Covered Call on SPCE - Potential income return 7.2% in 7 days
On June 5, 2020, we bought on margin 101 shares of SPCE stock (Virgin Galactic Holdings Inc.) paying $15.96 per share and simultaneously sold June 12, 2020 expiry covered call at the strike price of $16.5 for what we got a premium of $0.61
This trade comes as third in the month of June, and if we stick with our trading plan for this month, premium generated from this trade makes us about 10.16% from our $600 monthly goal, while in total we have already reached 25.63% from our goal. Wow.
This is also our first covered call with SPCE here on OptionsBrew.com, though I have done a few covered calls with SPCE in the past, just shortly after the SPCE IPO at the end of October 2019. On the other hand, we have done a few naked puts here on OptionsBrew.com and have collected some premium, but we still believe investing with covered calls is more profitable than investing with puts.
Without further ado, here is our trade setup:
Without furder ado, here is our trade setup:
BOT 101 SPCE Stock 15.96 USD
SLD 1 SPCE JUN 12 '20 16.5 Call Option 0.61
what can happen next:
If SPCE is trading below our strike price of $16.5 at 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: $15.35
In case SPCE is trading above our strike price of $16.5, our shares get called away at strike price $16.5 and we realize our max gain $115, or 7.2% potential income in just 7 days
Selling Covered calls and puts on SPCE stock
Running Total 5 Trades since April 27, 2020
Trade P/L $148
We are looking to buy additioanl 25 shares of SPCE once there will be enough premium to cover at least 12.5 shares. With the current price at $15.96 it would mean - $199.5 collected with premiums. As we have already collected $146 - $53.5 to go
kaupeens Fri, 06/05/2020 - 10:03