Covered Call on Pfizer (NYSE:PFE) - Potential income return 1.49% in 30 days (17.4% annualized)

On November 18, 2020, we sold 1 covered call on Pfizer (NYSE:PFE)  stock expiring on December 18, 2020. For this trade, we got a $59 premium (before commissions).

This trade comes as the #18 in the month of November, according to our trading plan for this month, the premium generated from this trade makes us about 12.57% from our $450 monthly goal, while in total we have already reached 77.13% so far.

Pfizer stock is part of our Partnership fund, we started acquiring Pfizer stock in January 2020, and it took us 11 months to have 100 stocks + we got free 10 stocks with VTRS after the spinoff

As we were buying PFE stock throughout the year, our average buy price is: $37.87

here is our trade setup:

  • SLD 1 PFE DEC 18 '20 40 Call Option 0.59 USD

what can happen next:

PFE is trading below our strike price of $40 at the expiry date (December 18, 2020), in such case, we keep the premium and sell more covered calls to lower our cost basis. 

In case PFE is trading above our strike price of $40, our 100 shares get called away at the strike price of $40 and we realize our max gain $269.6 or 7.11% potential return of income in the next 30 days

Break-even: $37.31

Selling covered calls on PFE stock
Selling covered calls on PFE stock
  • Running Total  1 Trade since November 18, 2020
  • Options income $57

With 100 shares of PFE we could get annual dividend of about $152 (before tax), with selling covered calls on PFE we could get the same money in about 3 months. Awesome!