Covered Call on INGA - Potential income return 4.09% in 4 days

On May 11, 2020, I bought on margin 110 shares of INGA stock (ING Group) at Amsterdam stock exchange, paying EUR 4.88 per share

INGA is a Dutch dividend stock, paying dividends bi-annually, the current dividend yield is a bit above 14%.

When writing covered calls, we prefer to write them on good dividend stocks. It's hard to tell - is ING a good short term buy, but overall that's one of the largest banking corporations in the World.  

With total assets of US$1.1 trillion, it is one of the biggest banks in the world. It consistently ranks among the top 30 largest banks globally. It is also among the top 10 in the list of largest European companies by revenue.

Here is our trade setup

  • BOT 100 ING Stock 4.88 EUR
  • SLD 1 ING MAY 15 '20 4 Call Option 0.08 EUR

what can happen next:

INGA is trading below our strike price of EUR 5, in such case, we keep the premium and sell more covered calls to lower our cost basis. 

In case INGA is trading above our strike price of EUR 5, our shares get called away at strike price EUR 5 and we realize our max gain  EUR 0.2 (5-4.88+0.08) or 20 EUR

It should be added this was more like a test trade, in general commissions are too high and spreads are too narrow to call it a good deal. But anyhow, INGA is in our books now, and we hope to sell more covered calls on it in the future. 

Covered Calls on INGA stock

Potential income return 4.09% in 4 days
Break-even: EUR 4.8

  • Running Total  2 Trades since May 11, 2020
  • Trade P/L EUR8, with capital at risk EUR488