On May 22, 2020, our 100 shares of INGA (Dutch stock) were called away at the strike price of EUR 5
We established a position with INGA on May 11, 2020, buying 100 shares at EUR 4.88 per share and simultaneously selling 1 covered call contract with 4 days expiry on May 15, 2020, which we rolled into the next (this week).
- Covered Call on INGA - Potential income return 4.09% in 4 days
- Roll Forward INGA MAY 22 '20 5 Covered Call Option 0.14 EUR
This is yet another good example of how covered calls help generate income. We closed this trade with a 0.19 EUR premium plus realized a value gain of 0.12 EUR. Total EUR 31 or 6.35% return from our EUR 488 investment in 11 days. Quite a good outcome. Preferably our joy would be bigger if we were selling 10 contracts at a time, but every bit counts.
- Running Total 4 Trades since May 11, 2020
- Trade P/L EUR 31, with capital at risk EUR 488
- 6.35%return in 11 days
Next, we plan to write a naked put on INGA to collect more premius and if assigned - sell covered calls. It's called a wheel strategy. To make it more interesting and leave a room for larger profit we might sell 2 contracts instead of just 1.