Covered Call on PBCT - Potential income return 5.92% in 21 days

On July 31, 2020, we sold 1 covered call on PBCT stock expiring on August 21, 2020. For this trade, we got a $10 premium (before commissions). 

This trade comes as the #42 in the month of July, and if we stick with our trading plan for this month, premium generated from this trade setup makes us about 1.08% from our $700 monthly goal, while in total we have already reached 123.86% from our monthly goal.

PBCT stands for People's United Financial, Inc. an American bank holding company that owns People's United Bank. The bank operates 403 branches in Connecticut, southeastern New York State, Massachusetts, Vermont, Maine, and New Hampshire. It is the second-largest full-service bank in New England, one of the largest in the northeast, and the 46th-largest in the United States

PBCT is a dividend-paying stock (current yield is about 6% per anum). PBCT is paying a dividend in the following months - February, May, August and November

Here is our trade setup:

  • SLD 1 PBCT AUG 21 '21 12 Call Option  0.10 USD

what can happen next:

If PBCT is trading below our strike price of $12 at expiry date (August 21, 2020) we keep the premium and sell more covered calls to lower our cost basis. 

In case PBCT is trading above our strike price of $12, our shares get called away at strike price $12 and we realize our max gain $67.4, or 5.92% potential income in 21 days. 

Our break-even price: $11.33

Selling covered calls with PBCT stock
Selling covered calls with PBCT stock

  • Running Total 2 Trades since July 31, 2020
  • Options income: $8