Covered Call Trade Idea - Generate $214/mo from this Stock

This is not a trade recommendation, this is a trade idea. I'm not a financial advisor, anything written here should be taken with a grain of salt. I take no responsibility If you will decide to invest

On May 15, 2020 I bought 5 shares of INTEL Corporation (INTC) as a gift in a nameday to the little Sophie girl (this was a promise to my dad, who passed away a couple of days ago). The plan is to acquire at least 100 shares and start selling covered calls to generate semi-passive monthly income

Covered Call Trade Idea - Generate $100/mo from this Stock

Generate monthly income selling covered calls on INTC stock

On May 15, 2020, you could buy 100 shares of INTC stock spending $5.828 and simultaneously sell out of the money June 12 expiry covered call a strike price of $58.5 for about $2.14. That gets you $214 and makes about a 3.67% return in less than 30 days. Or about 44.04% annualized. Break-even: $56.14

INTC stock price as of May 15, 2020
INTC stock price as of May 15, 2020

If INTC stock closes below $58.5 on June 12, you keep the premium and start over.

If the stock closes above $58.5, your stock gets called away, but you keep premium $2.14 + realize value gain $0.17 ($58.5-$58.83) from selling stock higher than you bought. Total $231 or about 3.96% potential income return in 30 days.

There are several options you could use not to get shares called away, like a roll-up or roll forward. Or you could sell the stock, and start over by writing cash-secured put and get stock back.

Remember, you are selling one contract, 100 shares of INTC stock, make sure you have 100 shares to sell if called away.

The biggest risk  - involving in covered call strategy - the stock price could fall below our buy price and stay there for months/years.