Closed GPS Covered Call with +$108 Profit (14.22% yield in 22 days)

On May 22, 2020, our 100 shares of GPS  were called away at the strike price of $8

We established this position on GPS on May 1, 2020, by buying 100 shares at $7.59 per share and simultaneously selling 1 covered call contract with 7 days expiry on May 8 for a $0.22 credit, we roll forward this call to the next week's (May 15) expiry then for additional $0.27, and one more time rolled to the May 22 expiry for additional $0.27 credit.

From these 3 sold covered calls we generated a nice options premium of $0.67 per share.

This is yet another good example of how covered calls help generate income. We closed this trade with a hefty +$0.67 premium plus realized a value gain of $0.41

Covered calls with GPS
Covered calls with GPS

Our total gain $108 profit / 14.22% yield in 22 days

Next, we are going to  write a naked put on GPS to collect more premiums and if assigned - sell covered calls. It's called a wheel strategy.