Covered Call on AMC Entertainment Holdings (NYSE:AMC) - Potential income return 20.87% in 80 days / 95.21% annualized

On October 9, 2020, we sold 1 covered call on AMC stock expiring on November 27, 2020. For this trade, we got a $14 premium (before commissions)

This trade comes as the #9 in the month of October, according to our trading plan for this month, the premium generated from this trade makes us about 1.93% from our $600 monthly goal, while in total we have already reached 15.84% so far.

AMC Entertainment Holdings, Inc. is an American movie theater chain headquartered in Leawood, Kansas, and the largest movie theater chain in the world. Founded in 1920, AMC has the largest share of the U.S. theater market ahead of Regal and Cinemark Theatres.

We sold this call, just shortly we got assigned 100 shares of AMC, see:

As we had a credit spread, we had a defined risk, with stock falling bellow our bought put, we actually made some extra income from selling it and minimizing our loses

here is our trade setup:

  • SLD 1 AMC NOV  27 '20 6 Call Option 0.14 USD

what can happen next:

AMC is trading below our strike price of $6 at the expiry date (November 27, 2020), in this case, we keep the premium and sell more covered calls to lower our cost basis. 

In case AMC is trading above our strike price of $6, our 100 shares get called away at the strike price of $6 and (as we have already collected some premium from selling puts) we realize our max gain $114.80 or 20.87% potential income in 80 days

Break-even: $4.35

Selling Covered Calls with AMC stock
Selling Covered Calls with AMC stock
  • Running Total 19 Trades since August 3, 2020

  • Options Income: $271