Covered Call on SmileDirectClub (NASDAQ:SDC) - Potential income return 5.10% in 23 days (80.93% annualized)

On November 6, 2020, we sold 1 covered call on SmileDirectClub (NASDAQ:SDC)  stock expiring on November 13, 2020. For this trade, we got a $39 premium (before commissions).

This trade comes as the #4 in the month of November, according to our trading plan for this month, the premium generated from this trade makes us about 8.13% from our $450 monthly goal, while in total we have already reached 12.13% so far.

We sold this covered call just shortly after we got assigned 100 shares at $10.5 each, see: Credit Spread on SmileDirectClub (NASDAQ:SDC) – 1.63% potential income return in 16 days / 37.18% annualized

here is our trade setup:

  • SLD 1 SDC NOV 13 '20 10.5 Call Option 0.39 USD

what can happen next:

SDC is trading below our strike price of $10.5 at the expiry date (November 13, 2020), in such case, we keep the premium and sell more covered calls to lower our cost basis. 

In case SDC is trading above our strike price of $10.5, our 100 shares get called away at the strike price of $10.5 and (as we have already collected some premium from selling puts in the past) we realize our max gain $53.6 or 5.1% potential return of income in 23 days

Break-even: $9.97

Selling Covered calls with SDC stock
Selling Covered calls with SDC stock
  • Running Total  27 Trades since April 27, 2020
  • Options income $559